Technology sector to drive recovery of South East office market

Knight Frank predicts ICT sector will account for 50% of office space demand in Thames Valley

Article posted: 11 May 2011

The ICT sector is set to drive the recovery in demand for office space the South East. Technology firms are forecast to make up 50% of demand for office space in the Thames Valley region within the next 12 months, according to Knight Frank’s M25 Offices Q1 2011report.

The Thames Valley area is leading the office market recovery in the South East. In the M25, Q1 2011 take-up of 452,000 sq ft shows a 15% improvement on Q1 2010, but is nevertheless 30% below the ten year quarterly average. However, in the M4 office market, take up of 415,965 sq ft in Q1 2011 was a massive 82% above Q1 2010, and also exceeded the long-term average.

The same applies on an annual basis. M4 take-up is 12% ahead of the ten year annual average, a surprisingly resilient performance so soon after the recession, while the M25 remains 20% down on average.

Demand has been focused on New and Grade A stock, accounting for 92% of Thames Valley take-up over the last 12 months compared with 79% on average. Out-of-town space has also featured prominently in the recovery, accounting for 64% of Thames Valley take-up over the past year. Active occupiers are demanding large floor plates, car parking, security and profile which town centres sometimes cannot provide.  

Given the focus of the most active sectors on the Thames Valley region, a host of key towns in this area show a looming supply and demand imbalance. Towns with less than three years supply of new and grade A office space include Richmond (0.9 years supply), Uxbridge (1.2 years), Staines (1.8 years), Hammersmith (2.7 years) and Chiswick (1.4 years). Headline rents in these centres also support the case for speculative development, finance permitting. 

For a copy of Knight Frank’s M25 offices Q1 2011 report which covers the investment, development and occupier markets, please email: oliver.dusautoy@knightfrank.com

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Posted by Janet