Long road to recovery

The Thames Valley office market is ratcheting up steadily as the recovery broadens and speculative activity is renewed. That brought a strong first three months of the year with a surge to a record performance, said King Sturge (who have now
merged with Jones Lang LaSalle). It calculated a 37,996 sq.metres (409,000 sq.ft.) take up, which
beat the five year average and was a 37% rise on the same period of 2010.

The encouraging change for long term growth is that total availability declined by 10% compared with a year ago to 641,010 sq.metres (6.9 million sq.ft.). Piers Leigh of Jones Lang LaSalle commented: “Due to the slow progress of large transactions, we are still forecasting a slightly below average take up for the year of 139,350 sq.metres (1.5 million sq.ft.).” He noted Grade A supply could fall to a critical level in west London which means rents will rise. For the future “we have seen a significant rise in speculative development with four key schemes within the M25 under construction or due to start within the next six months.”

Knight Frank highlights the dominance of manufacturing and pharmaceuticals which account for a third of total demand. It also noted that active demand declined in the first quarter by 14% to 472,119 sq.metres (508,201 sq.ft.) after a number of requirements were satisfied. While the agent welcomes the rise in speculative development it believes that it will be limited and confined to prime locations. According to Knight Frank, Maidenhead had four deals in the first quarter, the largest being 4,645 sq.metres (50,000 sq.ft.) to Adobe in Market Street in the centre of the town which only completed in the final three months of 2010.

As far as the M25 market is concerned, the agent cautiously predicts a 5% increase to 213,670 sq.metres (2.3 million sq.ft.) this year compared with 2010 but expects little change on the total for the M4 and even a 15% decline in the M3 take up.