According to Savills, the Essex office investment market has seen significant activity in the first half of 2018. To date up to £64 million has been invested across the county, 83% above the year-end total for 2017. This has been driven by an increasingly strong occupational market with record rents achieved in both Brentwood and Colchester so far this year.
Notable investment deals include the sale by Legal & General of Sigma House in Basildon for £28.25 million to an overseas investor and Boultbee Brooks sale of Stone Cross in Brentwood to Mayfair Capital for £19.3 million. 2018 has seen five transactions to date, higher than the full year total for both 2015 and 2016. Savills anticipates that it is likely to be a record year for the county, with investment volumes set to reach a ten year high.
On the occupational side, Brentwood has had a particularly strong start to the year with take-up reaching 64,100 sq ft (5,955 sq m), a 553% increase on 2017 and higher than the previous five year average. This was driven by two key deals including Sky taking 39,490 sq ft (3,668 sq m) at Stone Cross, the biggest deal this year to date, and Taylor Wimpey leasing 15,710 sq ft (1,459 sq m) at 1 London Road.
As a result, Savills has seen rents skyrocket. In Brentwood, Sky paid a record £28.25 per sq ft (£304 per sq m), a 25% increase on last year’s top rent of £22.50 per sq ft (£242 per sq m). Colchester has also seen record rents achieved at the second phase of Colchester Borough Council’s Amphora Place, with insurance broker Aston Scott set to pay £18.50 per sq ft (£199 per sq m), up from £17 per sq ft (£183 per sq m), following the pre-let of the 10,000 sq ft (929 sq m) building.
Mike Storrs, associate director in the business space team at Savills Essex, comments: “Essex remains a cost effective alternative to London, benefitting from good road and rail links, which will improve further still once Crossrail extends to Shenfield later this year. This is particularly appealing to occupiers who are able to significantly slash property costs by moving their back office functions to the region. From an investment perspective, investor’s will continue to be attracted by the potential for rental growth, good levels of demand from businesses looking for space and their ability to trade stock if required. If we look ahead to the end of 2018, Essex is almost certainly on track for a record year.”
