LISTEN: Take-up in the South East office market for Q1 2016 is the strongest since 2008, according to Knight Frank.
Overall occupation rose by 30% with a total of 973,000 sq ft of space being let or acquired during the quarter, 10% above the ten-year average.
Robust demand ensured a continued supply shortage in the region, with availability levels falling by up to 30% below long-term trends.
The first quarter also recorded £494m of investment, which is consistent with the 10-year average, predominantly the result of AEW’s£325m acquisition of SEGRO’s 972,000 sq ft office portfolio in Slough.
With stock levels improving in Q2 Knight Frank predicts an increase in transaction volumes from the middle of the year and expect investment volumes to be close to £2bn by year-end.
Emma Goodford, head of national offices, Knight Frank, said: “Overall take-up in the first quarter has been encouraging, particularly set against increased market anxiety relating to the EU referendum.
“With this in mind, we are predicting strong rental growth in key locations, particularly where new development is accompanied by infrastructure and amenity improvements.
Tim Smither, head of national offices investment, Knight Frank, added: “The weight of capital targeting opportunities in the South East remains robust; whilst some investors pause to await the outcome of the EU referendum, others are seeing opportunity. In particular, high-yielding asset management opportunities remain keenly sought after, supported by a strong rental growth outlook for the region.”
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