In 2021 we saw the bounce back of the office markets in the region’s major cities, including Portsmouth and Southampton, as the desire to be in and amongst city centre facilities and have a sense of place, returned.
Now, seven months into 2022 our South Coast agency team, the region’s leading commercial office agent, Russell Mogridge, discusses what we are seeing on the ground across the South Coast office market.
As businesses have begun to think about what their post-pandemic workplace strategies look like, workforces have been encouraged back into the office, and the professional services sector has led the way.
Having enjoyed the benefits that working from home provided for some (but not all), most businesses have opted for a hybrid office model for the medium term at least.
This is giving their teams the benefit of both worlds – the flexibility of homeworking, together with the social, mental health, career and innovation benefits that the office environment delivers – not to mention the recruitment lure.
This is translating into a continued ‘flight to office quality, as occupiers seek a higher standard of office building boasting a good range of amenities, collaboration spaces and green energy efficient credentials, to enable them to attract and retain talent.
The flight to quality, together with an historic lack of office development around the South Coast is pushing rents up, as there is so little supply of high-quality Grade A space available currently.
Despite rising rents, businesses are willing to pay for such quality, balancing the outlay against their ability to take a smaller footprint – thanks in part to the hybrid working model.
We have also seen the trend for Category A+ office space, which originated in the US and has now trickled out of London, reach our shores.
This fully-fitted ‘plug and play’ space has become increasingly popular, as occupiers want the ease of moving into a ready-made space, without the burden of the capital expenditure of office fit out on their shoulders.
We’ve seen great success in this approach at Charlotte Place in Southampton, Solent Business Park and Twenty3, where astute landlords have invested in the complete refurbishment of their assets.
They have rentalised the spaces in between, to provide a high-quality fitout and energy efficient credentials for businesses who increasingly seek to live and breathe their ESG values in the real estate they occupy.
Kingsbridge Estates’ £1.2 million refurbishment and extension at Charlotte Place in Southampton boasts the addition of a first floor business lounge, new breakout and collaborative space as well as secure cycle parking and showers – all of which are now deemed essential for investors / developers wanting to attract quality occupiers.
Twenty3 Brunswick Place, which we are marketing on behalf of Fidelity International, is a building which, under different circumstances could have gone for residential development.
Instead, the landlord chose to refurbish the 65,000 sq ft building to create Southampton’s most energy efficient, BREEAM Excellent building. Global engineering, architecture and consultancy company Ramboll was quick to capitalise on this, taking a 10-year lease of at the start of the year.
