Health of South East office market improves

Colliers International releases first South East Office Snapshot of 2012

Article posted: 14 Feb 2012

According to the latest South East Office Snapshot from Colliers International, total M25 availability rose again in Q4 2011 due to a combination of a slowdown in demand for larger units across the market and space coming onto the market. Overall vacancy rose to 17.3% with Thames Valley vacancy rising to (16.8%) its highest level for 12 months. Overall the availability of office space in the Thames Valley rose by 2% to cancel out falls recorded in Q3.

Quarterly take-up was down by 23% although Thames Valley transactions were on a par with the Q3 total. Activity remains strong for smaller units with TMT occupiers continuing to expand albeit on a modest scale. A number of confidential larger scale requirements look set to be activated in Q1 2012.

Office space in Chiswick, West London, Reading, Windsor and Richmond all saw rental uplift over the second half of 2011 as consistent demand for diminishing Grade A product helps to drive up headline rents.

Guy Grantham, Director of Research & Forecasting at Colliers International commented: “Take-up across the major M25 centres in 2011 was just over 8% down on the equivalent 2010 figure coming in at 3.9m sq ft compared to 4.2m sq ft over the previous 12 months. Both of these figures are down on the 2009 total of 4.3m sq ft.

“Vacancy rates remain stubbornly high in the majority of centres with only locations where demand has been above average or the development pipeline has failed to deliver, such as Chiswick, Richmond, Hammersmith and Wimbledon. Thames Valley availability rose in the final three months of 2011 but still remained below where it began the year.”

Philip Papenfus, Head of South East Offices at Colliers International commented: “The market will continue to be driven by lease events and speculative development will only take place in the established office locations where existing supply constraints allow. There may be scope for less costly refurbishment opportunities, with the option of delivery into a more positive environment in 2013, as opposed to more complicated and comprehensive redevelopment programs with a 24-26 month delivery schedule.

“We would hope to see 2012 herald a greater number of more ‘opportunistic’ transactions where competitive terms being offered by landlords reap rewards but additional voids may come through M&A activities as cash rich companies apply these resources.”

Click here to download: South East Office Snapshot, Q4 2011

For breaking news relating to office space in the South East follow us on http://twitter.com/officespacenews

Posted by Sara