Increased agile working may be a factor in the falling occupational take-up of office space on the South Coast, according to commercial property specialists at Lambert Smith Hampton (LSH).
The firm’s South Coast Office Market Pulse for the third quarter of 2017 also finds a continued squeeze on available space.
Andy Hodgkinson, Director of Office Agency for LSH on the South Coast, said: “Supply this quarter has continued its downward trend despite take-up being below the five-year average, which may also be a side effect of businesses increasingly embracing agile working, and occupying space more efficiently.
“We have also seen a large amount of office space converted to alternative uses such as student accommodation, or repurposed for hotel or residential use.
“This loss of office space, along with the refurbishment of existing buildings to “Grade A” quality and new build offices being almost non-existent, is contributing to a rise in prime rents to more than £20 per sq ft.”
The Q3 report notes that new prime rents are now required to secure space at the only new build office developments in the region – Southampton Science Park and Chilcomb Park in Winchester – where rates are quoted as £25 per sq ft.
The highest achieved rent in Southampton city centre is £22 at the city centre White Building, while Portsmouth’s 1000 Lakeside at North Harbour is close behind at £21.50 per sq ft. Trafalgar House, Winchester, has recently set a new headline rent for the city, reportedly achieving £29.50 per sq ft.
The LSH Q3 South Coast Office Market Pulse also found:
- The two most active sectors were construction and engineering (33%) and pharmaceutical, medical and healthcare (25%). The latter was down to a single transaction by Promega UK, which purchased land at Southampton Science Park for a new 18,000 sq ft UK headquarters
- There was a fairly even split between city centre and out-of-town take-up in terms of numbers and in size.
- Supply of office space fell 8.3% on the previous quarter, and was 12% lower than the same period of 2016
Andy Hodgkinson added: “There is an undoubted flight to quality that is taking place in the office market. Occupiers are focusing on improving the quality of space in order to attract and retain the very best staff and can accept paying a higher rent for this. An improved working environment can contribute towards greater staff wellbeing and in turn greater productivity and these are important drivers for business in a highly competitive marketplace.”
Lambert Smith Hampton is a multi-award-winning commercial property specialist and a leader on the South Coast in the industrial office space, property, and investment markets.
