The forecast from Knight Frank shows that technology firms are expected to make up 50% of office demand in and around the Thames Valley region in the next year. Leading the office space market recovery in the South East, the M25 area shows that the first quarter of 2011 lets agreed showed a 15% improvement on 2010 Q1.
Also, in the M4 office market, take up of 415,965 sq ft in Q1 2011 was a massive 82% above Q1 2011. The M4 take-up is 12% ahead of the ten year annual average, showing a surprisingly resilient performance so soon after the recession.
Many businesses are realising the longevity and potential to locating their business in such a thriving and well connected area, especially with improving transport links to central London provided by the new Crossrail development.
A large amount of the demand has been focused on New and Grade A stock. Out-of-town office space has also featured notably in the recovery, making up 64% of Thames Valley take-up over the past year. Active occupiers are demanding car parking, security and often a calibre of office space which town centres sometimes cannot provide. It has also become a go to office location for businesses frustrated at being priced out of the West End & City.
The ICT sector is anticipated to provide a key source of expansion, fuelled by a revival in the Silicon Valley, the boom of wireless technology and new entrants to the market from the Asian Tiger economies, such as Free Office Finder’s clients Huwawei.
As an analysis of potential new supply shows, restricted development over the next three years is to be expected.
After considering planning opportunities, funding and ownership credentials for all potential pipelines, it creates a forecast of just 1.4 m sq ft of new completions forecast by end 2013, in real terms just eight months supply. 90% of this new supply is in key Thames Valley towns. Without a real development surge over the last 10 years, new supply has been very limited. Occupier demand is more firmly focused on new and grade A space, but new build has dwindled. Given it takes least 24 months to deliver new stock, a mismatch between demand and supply looms in key Thames Valley towns.