Market snapshot

Thames Valley Office Market Pulse Q4 2013

The Thames Valley office market made a robust recovery in 2013 with occupier take-up increasing by 56% and total investment in excess of £1.16bn. This was in part thanks to strong Q4 results with take-up levels increasing to 580,383 sq ft in Q4 up from 254,150 sq ft (Q4 2012) and office supply down by 17%, with only 27% of availability considered to be Grade A office stock.

In this issue:

2013 office deals up 56%

The Thames Valley office market made a strong recovery in 2013 showing a 56% increase in take-up, while the number of office enquiries over 5,000 sq ft through the year increased by 17.5% in comparison to 2012.The robust finish to the year was in part thanks to strong Q4 results.Take-up levels in Q4 2013 were 653,892 sq ft, an increase on the Q3 2013 levels of 254,150 sq ft.

Increased take-up and falls in availability mean there is just under under four years of supply (7.4 years -2012) on the market at current take-up levels. This drops to 3.7 years for grade A stock (5.7 year - 2012).

Occupier demand has increased, reflecting real corporate growth/investment, not just the more passive lease event driven activity. Essentially this is the difference between 2012 and 2013. We expect occupier demand to, at least, remain at this new level in 2014.

Thames Valley office transactions above 5,000 sq ft

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

70,000

Commercial Estates Group Honda
£13.50 per sq ft
Building One, Vanwall Business Park, Maidenhead

53,283

Aviva Abbott Laboratories Subject to NDA
Station House, Bracknell

50,486

Receiver Inspired Assets FH £50.00 per sq ft
2 Longwalk, Stockley Park

36,765

Chester / Carval Suntory £30.00 per sq ft
3 Rivermead, Uxbridge

32,000

Legal & General NetApp £23.00 per sq ft
Hinshelwood Building, Oxford Science Park

31,568

Assignment of HP lease TripAdvisor £20.00 per sq ft
Orion Gate, Woking

 31,400

Connolly Crowther & Hofbauer LLP KFC £26.70 per sq ft
450 Brook Drive, Green Park, Reading

 30,413

Oxford Properties i2 Office £29.50 per sq ft, 11 year lease

 * Also at 5 The Square Stockley Park, 73,509 sq ft,  BP signed for a 12 month lease (extension). This has not been ncluded in the take-up statistics, but it is reflected in reduced supply figures.

Grade A supply falls by 24% in 2013

Total Thames Valley office supply at the end of Q4 2013 stands at 9.7m sq ft, down 17% on Q4 2012 where office supply totalled 11.75m sq ft. Of this availability, only 27% is considered to be grade A office stock.

The supply, particularly of quality offices, is not evenly spread and is becoming thin in some locations. New office supply has an 18/24 month time delay for delivery, so supply in 2014 is going to be limited. 2015 will be really challenging for occupiers, unless there is progress in the form of major refurbishments or new speculative developments.

Investments in excess of £1.16bn for 2013

Investments sold in the Thames Valley during Q4 2013 totaled over £372.5m (Q4:2012 £160m), with total investment for 2013 exceeding £1.16bn. This is significantly ahead of 2012 (£680m) and with a further £222.9m of investment transactions remaining in solicitors hands suggesting total investment for the year is set to double the level of transactions recorded in the preceding year.

While the average transaction value has remained virtually unchanged at £16.35m (2012: £16.98m), 2013 witnessed 72 deals (33 of which transacted in Q4) in total, far exceeding the 40 recorded the preceding year. This significant increase in activity has reduced supply and there are a very limited number of opportunities currently being marketed.

Key Thames Valley office investment deals in Q4

• AVIVA purchased the King Portfolio, which included offices in Leatherhead, Croydon and on Stockley Park for £48.15m 

• Enterprises House on Bakers Road in the town centre of Uxbridge sold for £52.25m, representing a net initial yield of 5.78%. The property was let for a further 14 years to Coca Cola, the investment was purchased by M&G Investments.

• Windsor House on Albert Street in the town centre of Slough, comprising a modern and vacant office property was purchased in a joint venture between Brocton and Landid. The acquisition price of £11.65m equates to a gross capital value of £123 per sq ft.

• Further speculative office development is anticipated to commence in Maidenhead town centre following Henderson Global Investors acquisition of the mixed use Kidwells site which comprises a Premier Inn and new build offices. This will be the third speculative scheme alongside Rockspring, Blackrock and Bellhammer’s 67,000 sq ft development known as Tor and Kames Capital 78,000 sq ft at The Point.

• Benson Elliot have gained revised consent to develop the Station Hill scheme in Reading town centre which will provide 1.2m sq ft of development, principally offices but also 32,000 sq ft of shops, 9,000 sq ft of leisure and circa 300 flats.

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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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