South coast offices 17th July 2013

Office market activity in the South Coast has remained at a similar level to the first quarter in Q2 2013 with take-up at 61,339 sq as opposed to 61,865 sq ft.

According to Lambert Smith Hampton’s South Coast Q2 review enquiry levels remained consistent too with the majority for space below 20,000 sq ft. South Coast office supply totalled 1.88m sq ft, an increase of 4.5% on Q1 2013 figures.

Grade C space saw the biggest increase on the previous quarter, rising by 11%, compared to only 3% increases in both Grade A and Grade B space (although Grade B space still dominates overall at 69%). Nearly 74% of all South Coast Grade C availability is in town, providing the potential for conversion to alternative uses, including residential. LSH said city centre prime rents remained at £18.50 per sq ft, while out of town prime rents were £18.75 per sq ft.

Out of town rents experienced downward pressure with Grade A supply levels higher compared to city centres. Winchester rents out-performed other city centres within the region this is on the basis of a constrained office supply which has helped to maintain higher rents.

There were two key office investment deals in the quarter: Enterprise House in Portsmouth was sold by LaSalle Investment Managers to Ashville Group for £3.05m, reflecting a net initial yield of 15.95%. Enterprise House has a floor area of 52,552 sq ft and is multi-let to tenants including Serco, First Secretary of State and Mapeley ABI. 1-8 Queens Terrace in Southampton was bought by Kingsbridge Estates Ltd for £1.2m. The property is being marketed for offices while alternative uses are being explored.