Thames Valley Hot Topics

February 15, 2018

The visual focuses on trends and influences affecting Landlords and Occupiers’ respective decisions around the Thames Valley Office Market. Specifically in terms of development, investment and occupation of offices which has traditionally been framed on a simple ‘supply & demand’ basis, the visual illustrates that there are a huge array of factors weighing on those decisions.

There are a myriad of factors influencing the market. Recruitment and staff retention is a huge aspect for occupiers in the region with the war for talent at the forefront of business leaders minds. With the age range and mix of generations now in the workplace greater than at any other time, keeping the office environment healthy and fit for purpose, as well as engaging but cost-effective is an area of expertise for Vail Williams.

Across the region Business Parks have helped compliment in-town office locations with the type of mixed-use accommodation that they can provide. Out of town locations benefit from increased car parking provision and swift communication links. Parks such as Winnersh Triangle that have invested well in their amenity offering and infrastructure over the recent past have benefitted by attracting new businesses to the park. The mix of Grade A modern offices with amenity on park, as well as the potential to have data centres, research and development and other uses in close proximity have kept this type of park relevant and at the cutting edge of business locations; creating a community of like-minded organisations.

Town centre locations have also seen strong take-up across the region, generally outstripping longer-term 10-year average figures over the past 2 years with a particularly strong finish to Q4 2017 with a number of leases completing. Over 50% of the take-up in 2017 was in the 5,000 to 20,000 sq ft ‘bracket’ (rather than the larger headline-making large HQ lettings) illustrating that there are a number of small and medium-sized firms, contract-driven space and M&A activity driving the market. Given the backdrop of underlying uncertainty around Brexit, the Thames Valley has performed strongly. The specifics of each town depend on the ability to maintain supply and the effects of the likes of Permitted Development Rights (‘PDR’ or the direct conversion of offices to residential) can be seen to have affected particular towns, for example in Windsor where a third of office stock has been converted in the past 5 years. In-depth knowledge around potential values, rents and incentives, and planning is vital in making sensible investment decisions.

With around two million sq ft of new office supply having been delivered in around 20 buildings in 2017, but just half a million sq ft in 9 projects coming online in 2018, should take-up continue to remain at or in excess of 10-year averages; then a real supply issue will come into play in 2019 at the point that The Elizabeth Line comes into use. Headline rents have continued to creep up both in offices and the industrial sectors. A further impact and continuing trend in 2018 has been the amount of space taken by ‘co-working’ providers (different types of flexible or serviced / membership / collaborative ‘office’ space). The likes of Spaces / WeWork / WorkLife / Pure Offices / Fora / Central Working and Orega …to name but a few(!) are all in expansive mood.

How do we, regionally, make public areas fit for purpose and deliver the retail & leisure experience that consumers now demand? The success of The Lexicon in Bracknell illustrates again that investment in the Public Domain and creation of a retail hub has knock-on effects across the town. Office take-up has picked up across Bracknell with particular success at the likes of Maxis. In the face of online retail growth and the rapid expansion of last mile delivery services to households it is vitally important that retail centres remain relevant and experiential.

These are just some of a huge range of pressures on land use across the region. At Vail Williams with a 50-strong team based locally at 550 Thames Valley Park we have research and insight across the regional Thames Valley market and would be happy to talk to you about how our multiple service lines can make land and property work for your business.