Thames Valley occupiers seem spoilt for choice. It’s a regional office market of 64m sq ft with 20% vacant, says Lambert Smith Hampton, while Savills believes 17m sq ft of leased space has breaks or expiries in the next three years.
Being so close to London, and with a long heritage in the TMT sector, the region should be at the forefront of recovery and inward investment. However, the recent Thames Valley Property Forum revealed three potential problems:
l Transport infrastructure – 75% of Thames Valley businesses give proximity to Heathrow as a primary reason for their location, and so uncertainties about the airport’s future are unsettling. Many occupiers see the debate over Heathrow as one they cannot influence because it is mired in political posturing.
Most would rather the government and airport operators concentrated on immediate improvements to the airport, such as staffing passport control as for the Olympics and addressing the level of Air Passenger Duty.
Access from the west and the overall performance of Europe’s busiest airport leave much to be desired. Good news, then, that while the government will review the long-term future of Heathrow, it now seems committed to the £500m WRAtH (Western Rail Access to Heathrow) scheme that will see a fast connection to the mainline westward, making Reading and Slough major interchanges for passengers from Wales and the South West.
l Promoting the region – although there was recognition of the good work that local enterprise partnerships and individual chambers of commerce do for their localities, there was a fear that they were not co-ordinated or visible enough to engage with sovereign wealth-dominated overseas investors.
Chinese business investors simply do not recognise the Thames Valley, although many acknowledge the importance of London and Heathrow to their European aspirations. Chinese culture relies on senior political engagement before investment decisions. Huawei’s recently reported £500m investment in 150,000 sq ft at Green Park Reading shows the potential scale of the opportunity.
l London as competition – as always, London is seen as both a stimulant and competitor for the Thames Valley’s commercial future. Nokia’s decision to close its research operations at Farnborough and move to a smaller building in Paddington reflected a fundamental change in its UK business operations, but also the availability of suitable office space close to its customers, collaborators and Heathrow.
Bizarrely, with 12m sq ft of vacant space across the region, there are still several popular towns with an undersupply of new space, such as Staines, Uxbridge and Weybridge. Arguably, “silicon roundabout” offers a deeper talent pool for fledgling dotcoms, so there must be some concern that the Thames Valley’s many TMT corporations move some R&D functions to this new hub.
The recovery could well start in the Thames Valley, but there are issues to address and it faces fierce competition from other European locations.
