It was a disappointingly slow start to the year in the Thames Valley with Q1 office market take-up less than half of the last quarter and enquiry levels at their lowest since Q4 2011. LSH comments this is partly due to the bumper quarter experienced in Q4 2013 and remains optimistic that Q2 could reap better results.
National commercial property consultancy Lambert Smith Hampton (LSH) has released its Q1 2014 office market statistics on the Thames Valley. The release follows the recent launch of LSH’s National Office Market Review 2014: http://www.lsh.co.uk/commercial-property-research/2014/04/office-market-review-2014-activity-hits-14-year-high
Q1 2014 enquiries
· Office enquiries in the Thames Valley in Q1 2014 were at their lowest level since Q4 2011.
· There was a 33% drop in office enquiries when compared to the same quarter last year (Q1 2014: 89 , Q1 2013:132 ). However enquiries in Q1 2013 were some of the highest quarterly levels to date.
Take up
· Q1 take-up was less than half of take-up in Q4 2013 (Q1 2014: 320, 439 sq ft ,Q4 2013: 653,892 sq ft).
· There was a 19% decrease in office take-up in Q1 2014 when compared to Q1 2013 (Q1 2014: 320,439 sq ft, Q1 2013: 393,805 sq ft).
· Woking was the only location with significant activity in Q1 with just under 120,000 sq ft transacted.
Nick Coote, Head of LSH’s Thames Valley offices, says: “It was a shame that the 48,000 sq ft Vodafone deal at Green Park didn’t take place this year as this would have lifted Q1 2014 take-up in the Thames Valley to the same level as Q1 2013. Instead, there was a marked contrast this quarter between the heated investment market and the occupational market in the Thames Valley. Increasing investment is shifting from London to the Thames Valley, positioning itself for expected improvements, but the impact of these changes is taking longer to affect the local occupier market. The occupier market is improving, but it’s patchy and it’s not, as some might perceive, a bull market. But despite a slower than expected start to the year, there is a general consensus that Q2 2014 will be better for the Thames Valley.”
Supply
· Grade A stock is 27.6% of overall supply (no change in comparison to Q4 2013)
· Total supply stands at 9.9 million sq ft
Investment
· Investment in the Thames Valley in Q1 2014 was in excess of £150m, which far exceeded the same quarter last year where investment was £79.6m.
· There is currently a limited number of Thames Valley office investment opportunities remaining available, which is leading to considerable interest being generated for those that exist. This shortage of available stock has meant both prime well let opportunities and shorter income/higher risk opportunities are creating evidence to continue placing downward pressure on yields in this sector of the Capital Market.
