The report, now in its fifth year, looks at the dominant commercial property trends in the last 18 months with detailed statistics and forecasts for 11 key centres in the region.
In the previous period of 2011/12, 72.5% of occupational office deals in the region were driven by lease events such as breaks or expiries. However, in an important sea change, the analysis of transactions in 2012/13 tells an interesting and more encouraging story; business expansion is driving increasing numbers of office deals in the Thames Valley, with 34% of all deals triggered by company growth.
Nick Coote, Head of LSH’s Thames Valley offices, commented: “In weaker economic conditions, lease events are the dominant driver behind occupational activity. However, our latest analysis clearly demonstrates a positive economic market indicator for the region; the steadying economy is leading corporates to consider their future growth requirements.”
This improved occupier confidence to invest the necessary capital and move to larger premises has led to a tip in the balance of demand drivers from last year. Compared to 72.5% in 2011/12, just 43% of last year’s transactions were driven by a lease event, with company expansion accounting for 34% - a much closer contender than it has been in recent years.
Nick added: “While office supply has just about managed to keep pace with demand for the last few years, we are now seeing a change in fortunes. As occupiers seek quality, larger office space to which they can relocate, the reality of the lack of such stock is starting to sink in; more than 1.76m sq ft of office availability in the region is of grade C quality, for which there is very little market.
“The pressure is therefore building on investors and developers, as occupier options in some locations are already thinning. As a result, we anticipate more speculative office development over the coming 12-18 months and a rise in rental values across the region over the next five years as the competition to secure the best quality space heats up.”
To download the full report, please click here.
To discuss the report's impact on your own Thames Valley office interests, please contact Nick Coote.
For information about the region's investment market, please contact Nick Lloyd.