New development in the M25 and the South East office market has paused, while age has become the key, according to Knight Frank’s latest The M25 report. Only three office schemes have begun in the past six months: two substantial refurbishments and one a ground-up development.

New development in the M25 and the South East office market has paused, while age has become the key, according to Knight Frank’s latestThe M25 report. Only three office schemes have begun in the past six months: two substantial refurbishments and one a ground-up development.

Alongside the two substantial refurbishments and one ground-up development, across 18 key markets in the M25 and the South East, 82% of office stock is on average more than 15 years old. Five towns - Heathrow, Woking, Watford, Croydon, Uxbridge and Farnborough – have more than 90% of stock which is pre-2003.

“Age in itself isn’t enough of a factor to instigate a decision to develop, other factors such as vacancy rates and a forecast of sustained rental growth must also be considered,” Emma Goodford, Knight Frank’s head of national offices, says. “However, today’s occupiers are not attracted to old space and new development is needed to ensure that the market does not stagnate and continues to attract new tenants.”

Against the backdrop of restricted stock, the research highlights five ’hot locations’ in the area, led by Watford and Croydon.

Watford’s available Grade A office supply equates to approximately one year’s worth of average take-up, while Croydon has the lowest vacancy rate in the M25 and has seen 30% rental growth in the last five years.

Knight Frank is confident that M25 will continue to attract a diverse range of capital, particularly from overseas investors. “Demand to finance defensive, core, real estate assets is strong, and well-let offices in the South East certainly fit the bill,” the report concludes.