South East Office Market occupiers continue to relocate in the quest to improve office space
Take-up has cooled slightly in 2023 after a dramatic improvement in 2022 following several large transactions. However most key locations have a number of transactions brewing as many occupiers continue to relocate in their quest to improve the quality of their office space, according to SHW’s South East Office Focus Q3 2023.
Tim Hardwicke, a partner at SHW and head of agency, comments: “As companies continue to work on providing staff with the best working environments they can afford, relocations have mainly been driven by changing size requirements, and often acted on when convenient lease events arise. There have also been a number of notable deals as a result of companies expanding or relocating as office attendance increases, with the new norm being back up to a minimum of 3 or 4 days per week in the office, and in many cases back to pre-pandemic occupancy levels.”
ESG continues to be a serious consideration for both landlords and tenants, with occupiers prepared to pay higher rents for top quality and wanting to benefit from the lower running costs that a modern, green building will offer.
In Croydon, availability has increased marginally and currently stands at 563,000 sq ft. Although rents remain at £36 per sq ft, quoting rents are reaching £40 per sq ft and take up has already almost doubled the whole 2022 figure at 26,585 sq ft let so far this year. Vacancy rate remains quite high at 11.9%, with a logged demand of 410,000 sq ft, schemes such as Bernard Weatherall House, offering up to 58,000 sq ft of BREEAM Excellent space will go some way to filling the gap for high-quality space.
In Crawley and Gatwick, take up is relatively healthy, up already on 2021 figures to 83,000 sq ft (57,500 sq ft for whole of 2021), but with a little way to go to reach the 2022 take up which totalled 203,000 sq ft. Rental levels have increased slightly to £28 per sq ft achieved in the first half of the year and in the last week have hit £36 per sq ft with the highest quoting rent at £38 per sq ft. Availability is about level with logged demand at 430,000/440,000 sq ft. At Park House in Crawley, 48,000 sq ft of the total 63,000 sq ft is now available to let.
Brighton & Hove has this year seen rental levels rise to £36 per sq ft, up from around £32.50 per sq ft where they have sat for the last three years. However, take up so far this year is relatively low at 37,500 sq ft, so far, but further deals are expected which should see the £40 per sq ft barrier smashed. Brighton take up in 2022 was a very healthy 220,000 sq ft, which cut availability significantly.
