PDR, relocations & downsizing/rightsizing to quality are driving parts the South East office market
Take up this year across the South East office market has been slow to date, with few transactions happening over 5,000 sq ft, according to SHW’s Q3 2025 South East Office Focus.
Office to residential conversions under Permitted Development Rights (PDR) are driving the market in some areas, where businesses are being forced to relocate and opting to downsize, albeit often seeking better quality space.
Tim Hardwicke, SHW’s partner and head of agency, comments: “Where there has been activity, the majority of take up is linked to a ‘flight to quality’ move, with businesses wanting to provide the best quality office space they can afford for their staff.
“Global uncertainty is holding back a number of occupier moves, which is resulting in low levels of take-up, albeit there are a few buildings under offer and so we expect the back end of 2025 to show more activity.”
As business and employment costs increase, occupiers are starting to look hard at property costs and push back on rental aspirations. As a result, buildings offering competitive overall occupational costs and/or larger incentives are likely to see higher letting activity. Successful lettings will continue to encourage investors to spend on refurbishment and repositioning of suitable stock.
In Croydon, top rents remain unchanged at circa £36 per sq ft where they have remained for the past three years. Take up, although slow, is already well over half the total of last year at 60,000 sq ft. Availability stands at 482,000 sq ft, but logged demand is low. The lettings this year include two at AMP House, Croydon totalling 7,000 sq ft and a 16,000 sq ft lease signed at Bernard Weatherill House, with some availability remaining in both buildings.
At Corinthian House, Croydon, a flurry of smaller lettings has taken place below the 5,000 sq ft marker, with the refurbished, 10-storey building recently welcoming Pinnacle ESP, TSA Riley, Cyclr and United response.
Thomas Tarn, director at SHW, explains: “In the Croydon area, take up has been concentrated on best buildings, including 69 Park Lane and Mosaic East, Interchange. The key driver of relocation has been the forthcoming conversion of buildings from office to residential under PDR. Downsizing, but upgrading, has remained a key feature of the deals that we have seen, including Southern Housing, AIG and AECOM who have demonstrated this trend. As existing building are converted to residential, this will directly remove office market stock and, indirectly, via tenant relocations.”
In Epsom and Leatherhead, rents are stable at circa £28 per sq ft and take is also well over half that of 2024 at 32,000 sq ft, aided by the big jump in logged demand of 260,000 sq ft in Q2 2025, spread across 22 enquires. The take up includes 8,000 sq ft let at Epsom Gateway and 6,000 sq ft at Newplan House, both in Epsom.
In Bromley there is a recorded uplift in rent from £30 to £34 per sq ft, however, there have been limited lettings over 5,000 sq ft. Requirements under 5,000 sq ft are more numerous than in the past two years, with more viewings on some ongoing negotiations.
In Burgess Hill & Haywards Heath availability is quite low (just 44,000 sq ft). However the demand is also not there, with only 9,000 sq ft requirements in Q1 this year being completed. Rents are at circa £22 per sq ft.
Crawley & Gatwick top rents are at circa £38 per sq ft. However just 6,250 sq ft has been let this year to date. On a more positive note, logged demand has increased. The Galleria on Station Road and the remaining 42,000 sq ft at The Create Building, both give occupiers some great space in the town centre.
Horsham, conversely, has bucked the trend this year, with take up almost double that of last year, already at 41,000 sq ft at rents of circa £25 per sq ft (from £19 per sq ft in 2024). Logged demand is also relatively healthy.
And finally, in Brighton & Hove, take up is edging up that of last year. Just 30,000 sq ft has been let so far this year, but with almost 800,000 sq ft of logged demand across the first half of 2025, this is likely to exceed 2024 figures. The available space includes 36,000 sq ft of best-in-class-office space, with onsite gym at Napier House, Trafalgar Square and 30,000 sq ft now available to occupy at 10 Middle Street. Sovereign House and also Imperial House are being refurbished which shows continued investor confidence in the market. There has also been good interest in the sub 5,000 sq ft category in a number of offices available on Queens Road.