Offices M25 latest 10th October 2013

M25 take-up surged to its highest quarterly level for 12 months in Q3 2013, reports Colliers International, with the caveat that quarterly take-up remains below the 10-year average.

The focus of activity in Q3 was the M3 corridor rather than the core Thames Valley markets. Thames Valley take-up (501,000 sq ft) was in fact nearly 50% on the equivalent quarter in 2012 (952,000 sq ft).

In contrast, the M3 market was nearly 50% up on Q3 2012 with 598,000 sq ft of deals recorded. Colliers said a healthy portion of that came from the BMW purchase of the 304,000 sq ft Southwood Campus in Farnborough but quarterly take-up was up in Basingstoke, Guildford, Richmond, Weybridge and Woking.

Guy Grantham, head of UK offices research, said: “Whilst there is much to be optimistic about in the M25 offices market, statistical analysis needs to be examined in tandem with accurate and market facing intelligence. Demand remains fragmented with an uplift in pricing caused by supply constraints in core Thames Valley locations still deterring some potential occupiers.”

Core Thames Valley figures were boosted Colliers said by the dunnhumby prelet (115,000 sq ft) and Nexen Petroleum taking the entire Stanza Building (82,000 sq ft) in Uxbridge. For the first time in 12 months overall M25 vacancy stands at 16% down from a cyclical high of 17.4% in March 2011.

While vacancy fell across all the North M25 and M3 submarkets, availability in the Thames Valley remained flat. Appetite for quality product varied across the submarkets also. In the Thames Valley, over 54% of all transacted space was new or refurbished.

The North M25 saw over 36% of Q3 take-up for new or refurbished space but in the M3 the figure was down at just 10%. Availability of new/refurbished accommodation fell sharply in the North M25 market, down by 18% quarter on quarter. This in turn is down 56% from a peak in Q4 2010 of 1.2m sq ft. However, Thames Valley new/refurbished availability peaked at 4.2m sq ft at the end of 2010 and now stands at 1.8m sq ft, a 57% reduction.

In contrast the M3 market has seen new and refurbished availability fall by less at 18%. Occupational costs remain a priority for some occupiers, Colliers said. It writes: "While there is much talk of a healthy pipeline of demand over the next six-12 months, boardroom concerns over rental levels continue to plague deal negotiations. Sharp upticks in headline rents in locations such as Uxbridge, Staines and particularly West London locations such as Hammersmith, where annual rental growth is running at 21%, are causing companies to reconsider preferred options."