Market snapshot

Office Market Pulse M1 Corridor Q3 2012

Despite continued challenges in the office market, Q3 revealed some positive signs on the horizon. Official figures show that the UK economy contracted by less than originally forecast in Q2, and it was recently announced that the economy grew by 1% in Q3.


In this issue:

Market activity increases

In comparison to 2011, Milton Keynes has seen an increase in take-up for Q2 and Q3 this year. Total take-up of office space in excess of 5,000 sq ft reached 33,910 sq ft in Q3. This was comprised of two freehold transactions – a rarity in recent years.

Despite no significant activity in Q3, Luton & Dunstable saw an increase in enquiry levels with a number of requirements providing an encouraging backdrop for Q4.

Northampton saw a slight increase in take-up during Q3, with a total figure of 21,398 sq ft. Demand focused on grade A space, and with limited availability, occupiers are now considering alternative options - as we have seen from increased interest in non grade A accommodation such as Elgin House, Castle House and Oxford House.

For a breakdown of take-up across the M1 Corridor please click here.

Significant occupational transactions


Property Size  Landlord(s)  Tenant/Purchaser  Lease information 
401 South Row 9,600 sq ft Balmoral ICA Freehold sale
Communications House,
26,000 sq ft Psion Muruta Power Systems Freehold sale
Kings House 3,599 sq ft Cullen Estates Ltd Undisclosed 3 year lease
£6.95 per sq ft


Occupiers forced to consider alternative options

The markets remain saturated with ageing stock. Once confidence returns, occupiers will increasingly seek alternative grade A opportunities and rents on dated buildings will suffer as landlords compete for tenants.

Milton Keynes will see a further surge in availability of secondary space as we move into Q4. There is no current prospect of speculative grade A development in the market.

Luton & Dunstable remains dominated by secondary stock, with grade A alternatives largely limited to pre-let options at Napier Park and Butterfield office and technology park.

The commercial district in Northampton continues to grow with West Northampton Development Corporation's regeneration plans well underway with a 61,500 sq ft office led development - St Peters, Waterside, located in the Northampton Enterprise Zone.

For a breakdown of availability across the M1 Corridor click here.

Investment activity remains subdued

There continues to be a low volume of office investments transacted in the region as investors remain focused on London and the South East. Nevertheless, Q3 did witness a small number of larger transactions as investors continue to search for opportunistic acquisitions or best in class assets.

Saxon Court on Avebury Boulevard in Milton Keynes - occupied by Milton Keynes Borough Council -  has sold for £11.5 million reflecting a net initial yield of 8.5%.

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