January 21, 2016
Commercial property activity in South East rose by nearly a third last year 0
Over 3.2 million sq ft of office space was taken up in 2015 – up 28 percent from the previous year and 13 percent higher than the five year average. According to the latest figures from CBRE UK, the largest annual take-up increase occurred in the M25 South region, which improved dramatically from circa 404,000 sq ft in 2014 to circa 836,300 sq ft in 2015. Net supply remained unchanged across the South East from the end of the preceding year at around 12 million sq ft, 15 percent below the five year average. There was an increase in the proportion of Grade A supply in the market, and 34 percent of the total supply was either newly completed or under construction compared to 26 percent at the end of 2014. This was the result of take-up of Grade B space, loss of office space due to conversion to residential, and the delivery of new space.
Activity in the larger size bracket strengthened slightly in 2015 with 11 deals over 50,000 sq ft compared to 9 deals in 2014. There was also a 12 percent increase in the volume of deals (in transactions of 10,000 sq ft and above) year on year with a total of 132 transactions across the South East in 2015 compared to 118 in 2014.
The wave of speculative development continues and there are 20 schemes currently under construction across the South East that will deliver close to 1.8 million sq ft to the market in 2016. Further pipeline development is set to complete in 2017 delivering an additional 1.3m sq ft.
“2015 will be viewed as a robust year in terms of take-up across the wider M25 market,” said Luke Hacking, Senior Director, National Office Agency at CBRE UK
“The success of 2016 will be underpinned by an increase in the number of 50,000 sq ft+ transactions. At this time Q1 is looking positive with the deals on Green Park to Thales (110,000 sq ft) and Bayer (80,000 sq ft) due to sign shortly and Amadeus rumoured to be close to signing an 85,000 sq ft pre-let in Heathrow.”
Commented Luke Hacking, Senior Director, National Office Agency at CBRE UK
“One trend that we saw throughout 2015 was an increasing number of occupiers facing affordability or supply issues in Central London and this stimulated interest in markets from West London outwards as well Stratford and Croydon.
“We expect to see this trend continue in 2016 with further commitment to space outside of core Central London resulting in the continuation of the rental growth seen throughout 2015.”