The opening of The Elizabeth Line in 2019 will provide a major boost to the Slough office market, according to Lambert Smith Hampton’s 2016 Thames Valley office market report. With occupier demand reflecting the benefits that this will bring to the town, rental values have started to rise, albeit void lengths remain a major challenge.
– Occupier activity reached a four year high in 2015, however, this was still below the 10-year average.
– Take-up was focused on modern second-hand space (90%), despite good grade A space being available.
– Supply is high compared with the rest of the Thames Valley at an availability rate of 28.7%, with 53% of stock out-of-town.
– Prime headline rents have stabilised at £26.50 per sq ft, following a 20.5% increase in early 2015.
Caroline Waldron, senior surveyor for Lambert Smith Hampton explains: “Whilst Slough had a strong year for take-up in 2015, it remains a marketplace for the opportunistic. The Brexit result may therefore have an interesting effect on Slough, as investors look to take advantage of a significantly improving occupier location once the initial volatility has passed.
“Occupationally, Slough’s biggest risk is the number of up-coming lease events, supporting the need for necessary improvements. Despite a relatively high amount of development in the pipeline for the Thames Valley market, prime rents are expected to exceed £28 per sq ft by the end of 2016. The key to these developments securing occupiers are prime locations, generous parking capacity and competitive incentive packages.
“A number of office buildings changed hands in 2015, as investors hoped to take advantage of rental peaks expected as a result of the Crossrail links (2019), WRAtH and the much needed town centre regeneration. We forecast that occupational deals will remain slow but once the market becomes less volatile, prime rents will continue to rise.”
