The South East office market is experiencing its lowest vacancy rates since 2001, driving rental growth to record highs in towns across the region, according to a Knight Frank report presented at its annual M25 breakfast presentation this morning.
The M25 vacancy rate for grade-A space stood at 4.2% in Q1 2015. Availability fell by 13% compared to a year ago, across all grades of stock, moving the market back towards the landlord’s favour.
The Conservative election victory is expected to improve economic performance across the region, further boosting demand.
Emma Goodford, head of Knight Frank’s national offices leasing team, said: “Vacancy levels are heading towards crunch point, in combination with the market seeing rental growth across a growing number of key centres.”
Head of South East investment Tim Smither: “The investment market continues to strengthen, with prime yields standing at 5% NIY. We expect this yield compression to continue for the rest of the year, driven by a combination of a lack of stock, significant levels of equity looking to be deployed, and anticipated rental growth in most core markets.”
