Market snapshot

Thames Valley Office Market Pulse Q2 2014

It has been a disappointingly slow start to the year in the Thames Valley, with total office market take-up to end of Q2 41% less than levels to end of Q2 2013. Enquiry levels in Q1 were at their lowest since Q4 2011, but in a marked turnaround have bounced back in Q2 to a record level. The low take-up in 2014 to end of Q2 reflects the low level of enquiries in Q1 but following a 55% increase in enquiries during Q2 we expect this to be reflected by increased take-up downstream during the rest of 2014.

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In this issue:

New enquiries bounce back in Q2 2014 pointing towards increasing activity in Q3 and Q4

Overall the total enquiry levels to end of Q2 2014 are now broadly the same as those seen in the first half of 2013. It has been quite unusual for there to have been such extremes between two consecutive quarters in terms of enquires, particularly as those extremes have reflected the lowest and highest volumes since we started recording them.

Q2 2014 take-up down 57% against 2013

Thames Valley take-up to the end of Q2 2014 totals 506,787 sq ft, a fall of 41% in comparison to the same period in 2014.

Q2 take-up was particularly low at 201, 348 sq ft, and this is 57% less than the corresponding Q2 2013. This disappointing take-up in Q2 follows the very low numbers of enquiries recorded in Q1 2014.

The Thames Valley office market has shown a surprisingly low level of occupier take-up in the first half of 2014, following on from such positive take-up figures in 2013.

The positive news is that the Q2 number of enquiries is the highest we've recorded (Q1 was the lowest). Overall 2014 enquiry levels are now similar to 2013. We expect that the bounce back of new enquiries in Q2 will feed through into much better levels of take-up through the second half of this year.

Thames Valley office transactions above 5,000 sq ft

 Property Size (sq ft)  Tenant  Landlord(s) Lease information 
One Bracknell Boulevard, Bracknell

20,935

Wincor Nixdorf M&G £17.50 per sq ft, 10 years with 6 year break
Capitol, Bracknell

42,543

Avnet Blackrock £16.00 per sq ft, 10 years
Infor House, Farnborough

12,286

Origen Financial Services BAE £17.50 per sq ft, 3 Years
3 Furzeground Way, Stockley Park

10,700

Alexion Pharmaceuticals LaSalle Investment Management £27.50 per sq ft, 10 years with 5 year break
Phoenix, Reading

20,500

Xafinity Ediston Properties & Europa Capital Rent confidential, 10 year lease with 5 year break

 

Grade A supply increases to 30% in Q2 2014

Total Thames Valley office supply at the end of Q2 2014 stands at 10,000,000 sq ft, down 9% on Q2 2013.

Of this availability 30% is now considered to be grade A office stock.

Investment in excess of £200 million

The value of investments transacted in the Thames Valley during Q2 2014 totalled £218.74m, which is a significant increase on Q1 2014 (£124.89m) and is also in excess of the same quarter in 2013 (£187m). In addition we anticipate Q3 returning similar positive results with over £150m of transactions currently in solicitors' hands and a further £116m being marketed. There have been 21 transactions completed in the quarter with an average deal size in excess of £10m, highlighting that the demand has principally come from the UK institutions and overseas.

Key Thames Valley office investment deals in Q2 2014

• AXA REIM disposed of two buildings: Geoffrey and Osprey House on Maidenhead Office Park. The two properties had been speculatively refurbished in 2012 and let on ten year leases. The two assets were purchased by Standard Life for a total consideration of £30.45m.

• Standard Life Investments acquired Hollywood House in Woking, a multi-let refurbished 1980s office with an AWULT of four years. The property sold in April and the price achieved was £15,020,000, reflecting a net initial yield of 6.44% and a capital value per sq ft of £388.

• Quantum Business Park in Maidenhead, which consists of two grade A buildings let to six tenants, was brought to market on behalf of Terrace Hill Group Plc and Marick Real Estate. It was sold in July for £46,750,000 to M&G Property, advised by Everton Phillips. The transaction reflected a net initial yield of 6.70% and a capital value per sq ft of £401.

• Bell Tower House in Maidenhead, a single let property located 100 metres from the train station and with a term certain of 4.3 years has been acquired by Mayfair Capital in June, for £5,227,000, reflecting a net initial yield of 6.30% and a capital value per sq ft of £373.

• Standard Life Investments purchased Chester House in Farnborough, a single-let office on Farnborough Aerospace Centre with an unexpired term of 9.8 years to BAE Systems Plc. The property sold in June for £14,918,000, reflecting a net initial yield of 8.00% and a capital value per sq ft of £320.

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Nicholas Coote

0118 960 6912

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Nicholas Coote
Head of Thames Valley

0118 960 6912

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