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Research - 01/10/2018

Thames Valley Office Market Pulse Q3 2018

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Total enquiries for offices over 5,000 sq. ft in Q3 2018 were 100, comparable with the total of 102 in Q3 2017, but slightly more than the total of 90 from Q2 2018.

Take up in the Thames Valley office market over 5,000 sq. ft in Q3 totalled 508,540 sq. ft, compared with 300,675 sq. ft in same quarter last year, showing a comparative increase of 69% between the two quarters. The Q3 total was also considerably more than the previous Q2 2018 which stood at 342,022 sq ft.

Enquiry levels very steady

Total enquiries for offices over 5,000 sq. ft in Q3 2018 were 100, comparable with the total of 102 in Q3 2017, but slightly more than the total of 90 from Q2 2018.

Smaller enquiries for space between 2,500 and 5,000 sq. ft in Q3 2018 totalled 72 compared to 88 in Q2 2018 and 74 in Q1 2018.

 

Thames Valley Office Market Pulse enquiries Q3 2018

Surge in take up

Take up in the Thames Valley office market over 5,000 sq. ft in Q3 totalled 508,540 sq. ft, compared with 300,675 sq. ft in same quarter last year, showing a comparative increase of 69% between the two quarters. The Q3 total was also considerably more than the previous Q2 2018 which stood at 342,022 sq ft.

Total take up for the first 9 months of 2018 is 1,208,342 sq. ft compared with 1,250,281 at the same point in 2017. This shows a comparative fall of just 3%, so the market seems quite steady.

70% of total take up was grade A stock in Q3 2018 compared to 78% in Q1 and 65% in Q2 2018. The most active sectors were Pharmaceuticals 25%, TMT 17%, Finance & Banking 12% and Serviced Offices 8% 

There was 81,238 sq ft of take up in the 2,500/5,000 sq. ft range which we have started tracking from Q1 2018 (73,106 sq. ft) and Q2 2018 (62,000 sq. ft).

 

Thames Valley Office Market Pulse take up Q3 2018

Significant occupational transactions

Property Size (sq ft) Grade Tenant Landlord Rent/Price Lease/Freehold
25 Windsor Road SLOUGH 111,000 A Slough Borough Council LRE Capital/XLB Confidential Freehold sale
Four10, Thames Valley Park READING 71,400 A Sanofi Royal London Confidential Confidential
2 Forbury Place READING 45,478 A KPMG M&G Confidential 15 years
Belmont UXBRIDGE 26,333 A Orega Aviva £32.00 10 years
Market House MAIDENHEAD 25,446 A Seqirus Shepherds Developments £31.50 7 years
4 Longwalk, STOCKLEY PARK 25,128 A IMG Aberdeen £38.50 9 years
The Porter Building SLOUGH 22,099 A Orange Business Services Spelthorne Council £36.00 10 years
The Switch SLOUGH 20,000 B Orega LaSalle Confidential Confidential
2nd Floor, 5 Pine Trees STAINES 15,500 A Hitachi Capital Runnymede Borough Council £34.00 10 years
141 Park Drive, Milton Park 14,000 A Wave Optics MEPC £30.50 Confidential

Office supply continues falling

Total office supply in the Thames Valley now stands at 7.57m sq ft, a fall of 9% since Q3 2017.

46% of current supply is grade A stock compared to 53% at the end of Q3 last year.

There is an increasing need for new development/refurbishment projects to feed the supply chain in 2019/20.

 

Thames Valley Office Market Pulse supply Q3 2018

Investment market review

The value of investments transacted in the Thames Valley during Q3 2018 totalled £484m, which is a significant increase on Q2 2018 (£248m). This strong performance is a result of portfolio activity and larger lot sizes being transacted.

There is a further £38m currently under offer. This coupled with the £115m of office stock currently available to buy, which has largely come on line since the start of September indicate that Q4 will finish the year with positive transactional volumes.  

Key investment deals

Western Corridor Portfolio

Spelthorne Council purchased the portfolio from a JV between Brockton Capital and Landid. The portfolio consisted on 3 buildings; Thames Tower, Reading , The Charter Building, Uxbridge and The Porter Building, Slough for £285m, reflecting a 6.14% net initial yield.

Microsoft HQ, Reading

The Valesco Group together with AIP Asset Management have exchanged contracts to buy the Microsoft’s UK HQ campus in Reading for £100m, reflecting a net initial yield of 6.6%. the 144,660 sq ft campus has an expired term of 8 years.

Strata, Staines

M&G has purchased Strata for £46.5m, reflecting a yield of 6%. The building was 88% let to two tenants with a WAULT of 7 years to breaks and 8.2 years until expiry. 

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