South East offices
Key towns update of activity
Hygeia Building, Middlesex
South East rental values hold out as remote-work declines
After two and a half years of uncertainty and confusion over where to work, we saw a palpable shift in the latter part of 2022. The percentage of workers who reported working exclusively from home fell from 22% to 14% between February and May, when the latest Office for National Statistics survey figures were published. A separate survey by LinkedIn, published in early November 2022, showed that fewer than 12% of job adverts in the UK were for fully remote roles — the lowest level since data collection began in September last year.
Looking to the year ahead, we have some obvious concerns about how macro-economic conditions and political uncertainty will impact take up numbers. Traditionally the occupational market takes longer to react to such outside influences and we may not see the true impact until early next year as relocation decisions are deferred until there is more certainty.
Our South East market report tracks activity across ten South East office markets, this tracker, combined with on-the-ground experience, allows us monitor market sentiment and activity.
Key findings for Q3 2022 are a per below:
- Rents are holding up and even increasing in some markets
- The overall vacancy rate for the South East is still slightly above average levels, but in some individual markets - including Cambridge, Crawley and Milton Keynes - vacancy rates remain in line with, or below, average levels
- Take up is back in line with the 5-year average
- Fitted space is attracting tenants over non-fitted in the sub-5,000 sq ft size range
- The flex sector is expanding as was predicted 2.5 years ago, although taking a mix of management agreements and leases generally at less than full market rents
- No sectors are particularly active although Life Sciences remains a ‘buzz’ sector as they can pay premium rents and so make headlines
- As job vacancies continue to rise, the management of corporate occupiers feel unable to enforce Return to Office, so that they are still unaware of exactly how much space they need. This means that where possible they will stay where they are short term or downsize, and then expand in the short to medium term.
TAKE UP (SQ FT)
Source: Avison Young
Source: Office for National Statistics
Source: Avison Young
South East key town activity
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