Car manufacturer Fiat Chrysler has begun searching for a 50,000 sq ft Thames Valley HQ, while the wider South East suffers with a dearth of large-scale office occupiers post-EU referendum.
The Italian company, which is currently headquartered at Fiat House on Bath Road in Slough, has instructed Colliers International to help it relocate and consolidate from several locations in the town.
Since the start of 2017, no deals of more than 50,000 sq ft have been struck, Colliers’ statistics show (see table below).
Fiat is currently located at AEW’s Slough portfolio, which fronts the Slough Trading Estate. It is believed to occupy around 50,000 sq ft, so its new search will represent a relocation rather than an expansion. Colliers refused to comment on the instruction.
The Thames Valley is experiencing an absence of larger deals, with enquiries in general down since the referendum. Demonstrating the impact that the Brexit vote had on the market, in H1 2016, enquiries were running at 50% higher than in the previous year, but following the vote, they ran at 58% lower than 2015 in H2, according to Lambert Smith Hampton.
LSH figures suggest the picture is not rapidly improving: its first half of 2017 report said a notable trend had been a step-change in the size of space sought since 2015.
With an increase in occupiers looking for small and flexible space (up from 40% to 50% for 5,000 – 10,000 sq ft requirements) and a fall of 61% in the number of 30,000 sq ft plus enquiries, “this is having a demonstrable impact on the market”.
LSH’s H1 Thames Valley report stated: “Take-up is likely to remain under pressure during 2017 and 2018 due to on-going political and economic uncertainty on a macro-economic scale, alongside a lack of big lease events across the market and a desire from occupiers to consolidate and use space more efficiently.
“However, there is a notable increase in demand from small and growing companies that can fill the void left by a fall in large requirements. Those buildings that are suitable for multi-let occupation and those landlords who are prepared to be flexible with lease terms to support company plans for growth will be able to outperform the rest of the market.”
At 1,702m sq ft, 2016 take-up across the Thames Valley was 19% below 2015’s total and 13% below the 10-year average.
Both 2014 and 2015 included peak quarters of more than 700,000 sq ft and 800,000 sq ft respectively, whereas 2016 saw four average or under-par quarters.
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