South east office news 31st March 2016

Take-up for the South East office market is expected to reach 650,000 sq ft in the first quarter of 2016 - down on the bumper final quarter of last year - but in line with the first quarter of 2015, reports Strutt & Parker.

Strutts defines the South East office market as the Western Corridor and the north and south M25 markets. 

Strutts reports: "Whilst not emulating the bumper previous quarter, when over 800,000 sq ft of space was transacted, Q1 2016 looks set to be in line with Q1 2015, which saw 689,000 sq ft of transactions take place across the South East."

Strutt & Parker has cited current named demand for South East offices as standing at 4.75m sq ft, marginally up from 4.7m sq ft at the end of 2015, with the majority of occupiers seeking to move during 2016.

Emulating the trend that has been seen in key South East towns in recent years much of the demand in concentrated in the sub 40,000 sq ft size band. Notable new requirements that have become active during Q1 2016 include L’Oreal, Virgin Media, Future Electronics, Blackberry and EY.

Ed Smith, head of national markets office agency at Strutt & Parker, said: “In addition to steady take-up in Q1 2016, we have also seen increased viewing levels, which are up by some 31% on Q4 2015 and 16% up on Q1 2015. Factoring in a sensible time lag between viewing and completion this suggests that the market should witness a strong second half to the year.”

2015 was characterised by the success of speculative development with almost 50% of the 875,000 sq ft built letting during construction. A total of 1.5 m sq ft across 15 schemes is due to complete during 2016 and a further 900,000 sq ft in nine schemes will follow in 2017.

Smith concluded: “Developers are having their confidence to build speculatively rewarded – in terms of both the calibre of tenants they attract and the rents they secure. As we near the opening of Crossrail we anticipate that demand for the hubs set to benefit the most will increase and rents could be pushed forward even more.”