Market snapshot

Thames Valley Office Market Pulse Q1 2014

It was a disappointingly slow start to the year in the Thames Valley with Q1 office market take-up less than half of the last quarter and office enquiries at their lowest level since Q4 2011. But despite the slower than expected start to the year, there is a general consensus that Q2 2014 will be better for the Thames Valley.

In this issue:

Office enquiries at lowest level since 2011

It was a disappointingly slow start to the year in the Thames Valley with Q1 office market take-up less than half of the last quarter and office enquiries at their lowest level since Q4 2011.

There was a 33% drop in office enquiries when compared to the same quarter last year (Q1 2014: 89, Q1 2013: 132).

However enquiries in Q1 2013 were some of the highest quarterly levels to date and the Thames Valley also experienced a bumper quarter in Q4 2013. So in comparison to both quarters, Q1 2014 levels look even lower.

However, despite these low levels, market sentiment is that Q2 could reap better results for the Thames Valley.

Take up less than half of Q4 2013

Q1 2014 office take-up in the Thames Valley was less than half of take-up in Q4 2013 (Q1 2014: 305, 439 sq ft, Q4 2013: 653,892 sq ft) and there was a 22% decrease in office take-up in Q1 2014 when compared to Q1 2013 (Q1 2014: 320,439 sq ft, Q1 2013: 393,805 sq ft).

Woking was the only location with significant activity in Q1 with just under 120,000 sq ft transacted.

The 48,000 sq ft Vodafone deal at Green Park didn’t take place this year, which would have lifted Q1 2014 take-up in the Thames Valley to the same level as Q1 2013.  Instead, there was a marked contrast this quarter between the heated investment market and the occupational market in the Thames Valley. Increasing investment is shifting from London to the Thames Valley, positioning itself for expected improvements, but the impact of these changes is taking longer to affect the local occupier market. The occupier market is improving, but it’s patchy and it’s not, as some might perceive, a bull market. But despite a slower than expected start to the year, there is a general consensus that Q2 2014 will be better for the Thames Valley.

Thames Valley office transactions above 5,000 sq ft

 Property Size (sq ft)  Landlord(s)  Tenant  Lease information 
Dukes Court, Woking

35,000 

Firefly Ltd Petrofac
10 year lease, £21.00 psf
Phoenix 1, Slough

34,786 

Irish Property Company Arvato 10 year lease with 5 year break, £13.50 psf 24 month’s rent free
Bourne House, Staines

23,846 

Standard Life Ricoh 10 year lease, £28.00 psf 15 month’s rent free
One Christchurch Way, Woking

19,283 

CBREi Mercer 10 year lease with 5 year break £25.00 psf 15 month’s rent free
Victoria Gate, Woking

18,310 

Valiant Mercer 9 month lease £18.00 per sq ft
Goldsworth House, Woking

16,000 

GE Real Estate Woking Hospice FH sale £2 million
25 Templer Avenue, Frimley Business Park, Frimley

 15,000

Halbert Thompson Directories Details not yet disclosed

 

Total supply at 9.9 million sq ft

Total Thames Valley office supply at the end of Q1 2014 stands at 9.9 million sq ft.

Grade A stock is 27.6% of overall supply (no change in comparison to Q4 2013)

Investment in excess of £120 million

The value of investments transacted in the Thames Valley during Q1 2014 totaled £124.89m, which is a significant increase on Q1 2013 (£79.06m). In addition we anticipate a strong start to Q2 with a further £84.63m currently under contract. These transactions under offer comprise 11 key deals with an average lot size in excess of £8m.  This increased activity has led to a shortage in stock with just under £230m of property being marketed across the region, which largely consists of two deals totaling £140m.

Key Thames Valley office investment deals in Q1 2014

• JLL advised on the sale of Charter Place, a headquarters office building in the heart of Uxbridge town centre. The property is let to Nexen and Coca Cola with an AWULT of two years. It sold for £26,500,000 in January, representing a net initial yield of 5.66% and reflecting a price per sq ft of £175.

• Colliers advised on the purchase of The Beaufort Building in Uxbridge, a multi let investment with an AWULT of 4.48 years in a prominent town centre location. The property sold in January and the price achieved was £14,850,000, reflecting a net initial yield of 6.50% and a price per sq ft of £362.

• Siena Court in Maidenhead was brought to the market by Strutt and Parker and sold to AXA in January at a price of £6,610,000, reflecting a net initial yield of 7.15%. This is a prominent headquarters building in Maidenhead let to MWB Business Exchange Centres with 11.3 years remaining on the lease.

• Dukes Court, a landmark office building in Woking, is currently on the market for £62,750,000, reflecting a net initial yield of 6.70% at this value. It has an AWULT of 7.7 years and consists of 220,000 sq ft of office space.

Want more information about this Snapshot?

Nick Coote, Thames Valley, Reading, Office agency
Nicholas Coote

0118 960 6912

Email me

Regions

Contact us now

Nicholas Coote
Head of Thames Valley

0118 960 6912

How can we help?

Submit