South East offices

Key towns update of activity

Q4 2022

Harman House, Uxbridge

Q4 – South East offices – a mixed picture

The South East office market continues to avoid generalisation. Most markets have a shortage of supply where low rents have not allowed developments or even refurbishments but some, mostly in the Thames Valley, have considerable over-supply. Demand is also unpredictable in the light of increasing momentum of the return to the office. Rents are also varied with most markets being stable but some experiencing increases where landlords can justify their confidence. UK GDP in November came out at 0.1% growth indicating a shallower recession that first predicted. Inflation has started to ease with a resilient labour market despite the increase in redundancies. The Bank of England raised rates again by 50 basis points to 3.5% and the government grants on energy will start to draw to a close towards the end of Q1 2023.

Our South East market report tracks activity across ten of markets, this and our on-the-ground experience allows us monitor market sentiment and activity.

Key findings for Q4 2022 are a per below:

Effects of the wider economy trickling down to impact incentives but rents generally holding up
Fitted space continues to attract the tenants over non-fitted in the sub-5.000 sq ft size range
The flex sector is expanding taking a mix of management agreements and leases generally at less than full market rents
Haleon deal shows Life Science sector is healthy spurred on by the supply of talent from some of the many universities located in the South East
Firms remain cautious about the size of new offices but an average of 50-60% is common - companies expanding are unusual
Overall take up in Q4 was 28% down on the five year average, while availability remained above the five year average for the fifth consecutive quarter.

In summary, the UK economy over the next six months will face head winds but we won't expect recession to be as deep as first expected. Effects of which on the South East will be firms being cautious on expenditure.

South East

TAKE UP (SQ FT)

Source: Avison Young

AVAILABILITY

Source: CoStar, Avison Young

NOTABLE TRANSACTIONS

Source: Avison Young

South East key town activity

Cambridge

Milton Keynes

Oxford

Basingstoke

Reading

Maidenhead

Slough

Crawley

Guildford

Woking

Weybridge

Watford

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CONTACTS

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