- Five large transactions contributing to more than two thirds of lettings
- Developers rewarded for speculative development
- Further rental growth anticipated as robust demand is met by limited supply
The Thames Valley office market maintained its momentum in the first three months of 2016 with take up totaling 344,409 sq ft, similar to the previous quarter and 6% ahead of the five-yearly average, according to Cushman & Wakefield. Five transactions over 15,000 sq ft – totalling 239,000 sq ft – completed, demonstrating the robust demand levels for larger units which accounted for 69% of all lettings during the first quarter.
Notable transactions included:
- Thales acquiring the whole of 350 Longwater Avenue, Green Park, Reading, totaling more than 111,000 sq ft
- Bayer’s acquisition of 80,000 sq ft in 400 South Oak Way, also at Green Park, Reading
- Datto expanding on Green Park, Reading, committing to 15,500 sq ft at 250 Longwater Avenue
- London Square Developments committing to 16,500 sq ft at One York Road, Uxbridge
- Jato Dynamics acquiring 16,000 sq ft at Hunton House, Uxbridge
The first quarter of the year also saw 81 new occupier requirements coming to the market totaling 1,535,550 sq ft, an increase of 51% year-on-year. On the supply side, total availability stood at 5.6m at the end of Q1 2016, which showed an increase of 7.7% on Q4 2015 but a 4.6% decrease year-on-year.
With demand outstripping supply of Grade A space across Thames Valley, rents quoted and achieved continued to show upward movement during the first quarter in most sub-markets with a record level of £37.50 per sq ft being recorded in Maidenhead. However, with a further 1,441,320 sq ft of Grade A space under construction there will need to be a steady conversion from demand into take-up if the balance is to be maintained.
Charles Dady, Head of South East Office Agency and UK Landlord Services, Cushman & Wakefield, said: “It has been a good first quarter for Thames Valley offices and the outlook remains positive with active demand outstripping new supply. However, with global economic turbulence affecting the capital markets and the EU Referendum approaching in June, Q2 will be an important watershed for Thames Valley.”