The slowdown in letting activity in the Thames Valley office market in 2008-9 has continued into 2010, according Lambert Smith Hampton’s latest research.
Takeup for 2009 totalled 1.1m sq ft – down from 2.7m sq ft in the previous year, representing a fall of 59% in take-up year on year. Lettings in the first quarter of 2010 amounted to 165,000 sq ft, compared to 272,723 sq ft in the same period last year.
However, LSH says that while the occupational market has shown a negative response to the recessionary economic conditions, there are now signs of increased activity going forward. It says that as long as a double dip is avoided, take-up will improve in the second half of the year.
As forecast last year, the supply side of the office market has remained relatively stable. As increased levels of takeup materialise, LSH expects to see the market supply issues, or shortages of quality stock, becoming exposed in some locations.
The report said: “While we’re not anticipating a tsunami of demand like we saw in the technology-filled 1980s, 90s and 2000s, we are forecasting growth in entrepreneurial and ‘value-add’ businesses to meet future economic aspirations.
“This demand can be seen alive and kicking in Guildford, with Surrey Satellite Technology’s planning application for 58,000 sq ft of additional space, and Lionhead Studios’ recent expansion on the park.
“Requirements are also live with a number of bioscience and pharmaceutical firms that are looking to either relocate to or within the Thames Valley’s specialist parks.”
Despite the beleaguered occupational take-up in the Thames Valley, the return of the UK institutions to a position of net investment nationally has been particularly apparent in the region, where they have bought the vast majority of buildings transacted.
However, the general focus on prime investment stock has impacted on the volume of transactions completed. LSH believe that £457m has been completed in the 12 months to July 2010, with a further £93m thought to be in solicitors’ hands – comparing favourably to the £352m transacted in the previous 12 months.
james.buckley@estatesgazette.com
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