Office take-up in the M25 area in 2013 was 28% higher than the previous year, according to data from Knight Frank.
This is the highest level seen since 2008.
Accelerating growth in the UK economy was reflected in strong demand in Q4, with take-up of 612,000 sq ft – taking the annual total for 2013 to 2.6m sq ft.
Engineering, construction and management company Bechtel’s leasing of 77,692 sq ft at FC200 in West London, at a headline rent of £28.50 per sq ft, was the biggest deal of Q4. Other key deals during the period include including Honda’s lease of 69,624 sq ft at Reflex , Bracknell and Abbott Laboratories’ lease of 53,283 sq ft at Building 1, Vanwall Business Park , Maidenhead.
Strong take-up and lack of development have pushed vacancy rates in the M25 down to 6.9%, the lowest level since Q2 2008. Meanwhile, the M4 vacancy rate fell from 9% to 8.3% during Q4, the lowest level in almost a decade.
However, developers are now starting to respond to growing demand. Construction activity in the M4 increased by 86% during Q4 to 700,000 sq ft, its highest level since Q1 2009.
Ryan Dean, partner, South East offices at Knight Frank, said, “The rebound in occupier activity in 2013 surpassed our initial expectations from 12 months ago and we are encouraged by the prospects for 2014. Knight Frank expects take-up to show further improvement, in line with the return to more consistent levels of growth in the UK Services sector. We forecast M25 take-up in 2014 to surpass 2013’s level to reach 2.7m sq ft, which is above the 10-year annual average of 2.6m sq ft.”
“Arguably the biggest threat to transactional activity now lies with the limited levels of existing new and good quality second-hand product. Supply has reached critical levels in a number of the more resilient Thames Valley markets, and we expect developers to increasingly seek out new opportunities in these locations”.
sophia.furber@estatesgazette.com
