Grade A business space dwindling in supply across Southampton

July 3, 2019

Solent-based Partner Nik Cox shares his views on the ever-changing business space market and how Vail Williams has thrived in Southampton city centre and beyond.

High-quality offices in Southampton city centre are increasingly in short supply following strong demand from discerning companies, warns business space specialist Nik Cox.

According to research, there is only around 100,000 sq ft of Grade A offices available, with rents rising to reflect buoyant market conditions.

Nik is a Southampton-based Partner at property consultancy Vail Williams LLP, which has been involved in over 80% of office lettings and freehold sales over the past year, over 5,000 sq ft and within a 10-mile radius of the city centre.

According to latest data, of the 17 transactions completed in the 12 months up to the end of May 2019, 14 have been overseen by Vail Williams either as sole agent or as joint agents.

Nik said: “Having been involved in the vast majority of deals in the past year, we are seeing significant demand for the city centre and the surrounding area including Solent Business Park.

“This is reflected in the highest rent to date, at newly refurbished Beresford House, Town Quay, Southampton. The rent for new occupier Starling Bank, reportedly creating 150 jobs, is £22.50 per sq ft.”

The largest city centre deal by square footage has been for 16,700 sq ft at Oceana House, Commercial Road, Southampton, at £21 a sq ft, Nik stated.

At Solent Business Park, Whiteley, three separate lettings, each at 17,500 sq ft, totalled 52,500 sq ft have help push the take up figures.

“Higher rents are being driven by a lack of supply of Grade A space available – in the city centre there is only about 100,000 sq ft available for companies looking to relocate to here, tapping into a skilled labour pool from the two universities and a growing tech cluster.”

The largest transaction completed saw Vail Williams dispose the freehold of 21,000 sq ft at Templars House, Chandler’s Ford, near Southampton.

Nik said: “The message to expanding companies on the search for larger premises, to meet the office environment expectations of discerning staff, is that you need to be looking ahead by at least two years.

“Top-notch offices are being snapped up – and a lack of development means supply will only tighten further, with rents on an upward trajectory. Solent Business Park and the business campus at Lakeside North Harbour, Portsmouth, are in strong demand.

“They, and other business parks along the Solent Corridor, are seeing record low availability. This means companies wanting to relocate now see Southampton city centre as the only viable relocation option, further squeezing local availability.”