Last year, the market saw 1.04m sq ft of office space transact – a significant dip on the 1.46m sq ft of activity registered in 2015. However, 2017 has got off to a booming start, with office take-up in the first quarter hitting 470,000 sq ft and record prime headline rents being set in some locations, according to Strutt & Parker.
One of the star performers so far this year has been Reading, says Jeremy Metcalfe, an associate in Strutt & Parker’s national markets office agency.
Praxis recently let 33,000 sq ft at its Hive Campus within the Arlington Business Park to Nokia in the biggest letting deal in the Reading office market in 2017.
“Reading retains its position as the capital of the Thames Valley, with 117,000 sq ft of lettings taking place so far in 2017, a majority of which were in the town centre,” says Metcalfe. “The town has seen headline rents reach £36.75/sq ft and further success is anticipated with the delivery of high-quality speculative developments and the arrival of Crossrail.”
Another Berkshire town putting on a strong show is Maidenhead, where Q1 2017 take-up levels were equivalent to half the space that transacted in the whole of 2016.
“Particular highlights recently have been [the office development] Point reaching full occupancy and a new record rent for the town of £38/sq ft being set at The Pearce Building,” says Metcalfe.
Slough has also seen headline rents push on towards the mid-£30s, but other areas in the Thames Valley aren’t faring so well on the rental front.
“Bracknell has experienced issues with oversupply in recent years and although this is now being slowly absorbed, headline rents have been suppressed and haven’t surpassed levels achieved in previous economic cycles as other towns in the Thames Valley have,” explains Metcalfe.
While Bracknell faces an oversupply issue, the opposite is true in Oxford, where there is a significant amount of pent-up demand but also a severe lack of grade A space. Metcalfe says that any developer wanting to deliver a scheme in the centre of the city would be well advised to capitalise on this demand. The same rule of thumb applies elsewhere in the region thanks to the ongoing supply/demand imbalance some locations are experiencing.
“More than 1m sq ft of speculative space is set to be delivered across Thames Valley towns in 2017 and, with demand for the wider region standing at 4.6m sq ft, we can expect to see landlords and developers continuing to reap the rewards of speculative development in terms of both the calibre of tenants and headline rents,” says Metcalfe.
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