Time for developers to refurbish secondary office space

Research says limited prime space is stimulating prime rents in some areas of South East

Article posted: 07 Nov 2011

2011 take up of office space in the South East is on course to match that of 2010 but it will still be below the five year annual average of 3.9m sq ft, according to BNP Paribas Real Estate.

The leading international real estate adviser’s South East Office Market Q3 report shows that total take up rose 128% from Q2 levels to 934,700 sq ft with the South M25 market seeing 300,000 sq ft of space transacted due to some large lettings, and take up of office space in the Thames Valley three times higher than Q2 2011 with 487,000 sq ft transacted, on par with the five-year average of 483,000 sq ft per quarter for that region.

Pharmaceuticals and biotechnology was the most active Q3 sector, accounting for 21% of total take-up in the South East office markets due to sizeable lettings to Astellas Pharmaceuticals at offices in Chertsey, Surrey, Novartis at offices in Camberley (pictured) and Allergan at offices in Marlow, Buckinghamshire.

Simon Fitch, head of South East office agency at BNP Paribas Real Estate, said that the limited level of prime space in certain locations has seen some prime rents moving forward – notably for office space in Chiswick and offices in Richmond. He commented: “Q3 saw a number of long term requirements finally taking space. Another interesting market dynamic continues to be occupier’s desire for freehold property. Q3 saw around 350,000 sq ft of freehold space transacted – occupiers are clearly seeing some good value which we expect to continue.”

The South East office investment market saw a decrease in activity in Q3 2011 with total investment falling to £242m, 10% lower than in Q2. However, overall 2011 has outperformed 2010 levels with total investment to the end of Q3 reaching £1.2bn, well ahead of the £728m achieved over the same period last year.

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Posted by Sara