The Thames Valley office market saw 657,241 sq ft taken up during the first half of 2016, 9.2% down on the long term half yearly average, according to a report out today from Cushman & Wakefield.
The decline was in part due to the slightly subdued take up volume in the second quarter of this year, where activity was marginally down, falling by 9% quarter-on-quarter and 14% below the five year quarterly average.
A total of 312,832 sq ft was let across the region during Q2. Four transactions alone totalled 140,500 sq ft, accounting for 45% of transactions measuring over 15,000 sq ft, demonstrating sustained appetite for larger units among occupiers.
Notable transactions included:
- Amadeus securing a pre-let at 4 World Business Centre in Heathrow totalling 85,000 sq ft
- Blackberry acquiring 18,500 sq ft at the newly developed Pearce Building in Maidenhead
- Alnylam taking 20,000 sq ft at Braywick Gate in Maidenhead
- Informatica committing to 17,000 sq ft at Building 4, Foundation Park
The delivery of only a handful of schemes across the region meant that supply levels fell back slightly in Q2. However, with a significant number of schemes currently under construction and due for delivery throughout the second half of 2016, it is anticipated a spike in supply will be seen later this year.
Prime headline rents showed further growth in Q2 with £37.50 being achieved at the Pearce Building, Maidenhead, and £41.20 per sq ft at Morgan House, Windsor.
Other key centres such as Reading have also witnessed an increase in prime rents - evidence of robust occupier demand within key Thames Valley markets. As such, Q2 witnessed 1.13m sq ft of new demand across the Thames Valley. Despite being 0.4m sq ft down on Q1, demand is 6.6% up on the long term quarterly average.
Charles Dady, Head of South East Office Agency and UK Landlord Services, Cushman & Wakefield, said: “While the second quarter saw take up fall marginally by 9% from the first, grade A supply also fell by 5.2%.
“Nonetheless, a number of key deals were completed during the quarter, and headline rents increased by 10.4% year on year, which is a promising sign.
“However, Q3 will be a much bigger test as the impact of the referendum result will begin to affect occupier decision making.”