Market snapshot

Office Market Pulse South Coast Q2 2014

In Q2 2014 office market take-up on the South Coast was over four times greater than in Q1, totalling 179,249 sq ft. Office supply has fallen slightly despite excellent take-up this quarter.

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In this issue:

Office take-up soars

Take-up for the South Coast region was over four times greater than last quarter totalling 179,249 sq ft. A large proportion of this take up was attributable to a sale of The Connect Centre, Portsmouth comprising 66,000 sq ft to Auto Windscreens for its own occupation. We anticipate this strong take-up will continue into the second half of the year with a number of enquiries above 10,000 sq ft still to be satisfied. Disposals for change of use through permitted development rights continue.

Significant occupational transactions in Q2 2014

Property  Size (sq ft)  Landlord(s)/vendor  Tenant  Lease info 
The Connect Centre, Portsmouth 66,000 sq Ft Hampshire and Regional Auto Windscreens Sold - confidential terms
Fareham Point, Fareham 12,580 sq Ft Haywood Baker P4i Sold for residential development £1.25m
1500 Parkway, Solent Business Park 11,500 sq ft Chemring Matchtech Sublet for the residue of the term
1000 Lakeside, Portsmouth 10,116 sq ft Highcross Wiggle Headline rent £16.00 per sq ft
Building 5 Brookside Centre, Southampton 9,200 sq ft  C&G  Spire  20 year lease. Confidential terms 
Forum 3  7,500 sq ft  M & G  Aztec Financial Services 10 year lease. £14 per sq ft 
The Pavilion, Eastleigh  6,576 sq ft  Helical Bar plc  WYG Group  5 year lease, headline rent £16.50 per sq ft 

Prime rents maintained

Grade A space has fallen from 16% to 13% of total supply in the past three quarters. With occupier demand continuing to improve, prime rents will come under some pressure, although currently they are being maintained at £19 per sq ft (city centre) and £18.75 per sq ft (out of town). Winchester rents are still out-performing other city centres in the region with prime rents reaching £20 per sq ft.

Decrease in supply levels

Office supply has fallen only slightly despite excellent take-up this quarter, which has been attributed to some significant deals occurring “off-market” (including The Connect Centre sale) and with some large office space returning to the market including Berrywood Business Village (circa 24,500 sq ft), Eagle Point (circa 15,000 sq ft), 1650 Parkway (17,495 sq ft). Availability now stands at approximately 1.506m sq ft.

Severe shortage of grade A supply

There is still a severe shortage of prime office buildings available in the region. Only 13% of all current supply is considered grade A including some which are refurbished older buildings.

South Coast office investment performance retained

The South Coast Office Investment market continues to see a good level of activity with a number of office investments going under offer including Cromwell House in Winchester, Brunswick Gate in Southampton in addition to New Kings Court and 4000 Solent Business Park mentioned below.

Probably the highest profile transaction, in the South Coast, to occur this year, is currently under offer. 4000 Parkway on Solent Business Park owned by a private individual, sought offers in excess of £72,000,000 reflecting a NIY of 6.01%.

Key investment deals in Q2 2014

  • Quay Point, Portsmouth was sold by Hendersons to Store Properties for circa £6.3m reflecting a NIY of 6.5%. Quay Point has a floor area of 52,359 sq ft and is fully let to 4 tenants with a WAULT of approximately 9.25 years to expiry.
  • New Kings Court is under offer at a NIY of circa 7%. The property is fully let to Blake Lapthorn with an unexpired term of 16.3 years at a passing rent of £960,000 per annum.
  • NAT’s, Solent Business Park is under offer the total current rent is £4,577,977 per annum with unexpired term in excess of 9.5 years. Offers were sought in excess of £72,000,000.

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Andy Hodgkinson

023 8071 3075

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Andy Hodgkinson
Director - Office Agency

023 8071 3075

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