South East focussed agency Hollis Hockley have reported that take up across the South East office market totalled 542,000 sq ft in Q1 2020. This was in 43 transactions, giving an average transaction size of 12,600 sq ft. Quarterly take up was 23% down on the 5 year quarterly average but in line with Q1 2019.
Take up of Grade A space dominated again, accounting for 82% transactions. Town centre transactions accounted for 68.7% of take up by square footage, significantly ahead of the long term average (49.6%) against out of town.
Whilst the Covid-19 business operational constraints came into effect in the second half of March, this doesn’t appear to have adversely affected leasing commitments in the month with 215,000 sq ft of lease completions.
Q1’s most significant transactions included;
- A major Pharmaceutical company taking 42,500 sq ft at 8 Arlington Square West in Bracknell, the largest letting in the town since 2013.
- Motorola committing to 19,700 sq ft of space at Midpoint in Basingstoke town centre.
- PWC taking 28,500 sq ft at 40 Clarendon Road in Watford.
- Asahi committing to 34,500 sq ft at Brook House in Woking
- Xero taking 56,000 sq ft at Avebury Boulevard in Milton Keynes.*
In Q1 new prime rents were achieved in Basingstoke (£28.00 per sq ft), Bracknell (£29.00 per sq ft), Watford (£36.50 psf) and Slough (£38.00 per sq ft). Prime rents across the region are detailed below.
Supply for the South East currently stands at 7.4m sq ft, representing an average vacancy rate across key selected office centres in the Hollis Hockley survey area of just 8.7%, the lowest level for 15 years.
Rhodri Shaw, Partner at Hollis Hockley LLP commented:
“Whilst take up in Q1 2020 was in line with Q1 2019, it was down on the long term quarterly average. At this stage, its is not yet clear how take up will be adversely effected by the wider Covid-19 situation in the coming quarters. We are aware of a few transactions in the sub 15,000 sq ft size range that have been delayed. It appears larger corporate occupiers already under offer on taking new space are proceeding. However, the situation is fluid and may change.”
Jeremy Metcalfe, Partner at Hollis Hockley LLP commented:
“It is clear that in a time of uncertainty and with a reduction in viewings at present, it is likely there will be a time lag and a gap in leasing transactions completing in 2-3 months time. Having said this, the South East market is resilient and predominantly lease event driven. The average vacancy rate is historically low, if speculative completions are delayed this year as a result of Covid-19 we could see a very tight supply position in Q4 2020/Q1 2021, which should encourage occupiers to commit if they want to secure best in class space.”