25 August 2021
DEMAND GRADUALLY RETURNS FOR SOUTH EAST OFFICES
Offices
The longer than expected lockdown and delays in lifting restrictions have continued to dent office take-up across much of the South East, according to SHW's latest Focus research.
However, the healthier outlook since 'Freedom Day' has encouraged more businesses to prepare for a return to the office in September/October, triggering a gradual rise in enquiries, inspections and deals.
In Croydon, take-up in the first half of this year was only 22,000 sq ft, following last year's total of 35,000 sq ft. But SHW director Holly Purvis said that after a poor start to the year, ongoing deals look set to lift take-up to around 140,000 sq ft by the end of 2021. These include a 20,000 sq ft letting to the Passport Office and completion of the 56,000 sq ft Electric House letting to London South Bank University.
Croydon availability increased to 616,000 sq ft in the first six months (425,000 sq ft in 2020), largely due to decreased occupier demand although new space has also been added: 105,000 sq ft at Southern House and circa 60,000 sq ft at The Annexe. Grade A rents are holding up at £34 per sq ft with occupiers increasingly seeking flexible, short-term leases on fitted space in the best quality buildings.
Brighton also had a quiet start to 2021 with just 13,500 sq ft taken up in the first half. But in the last two months, SHW has agreed three office lettings, totalling 50,000 sq ft, at rents of £32-36 per sq ft, with the latter setting a new rental level for the city when the deal completes.
Availability in Brighton is steady at 250,000 sq ft, giving a vacancy rate of 5.5%. New developments include 125,000 sq ft of offices at Edward Street Quarter, due for completion next year, and MRP's third scheme in the city, The Portland Building, which will provide 30,000 sq ft.
Tim Hardwicke, head of agency at SHW, said: "The last six months have been a period of adjustment as businesses work out just how much office space they need and when they want to occupy it.
"While some realise that they require more space than they originally thought, reductions of 20-50% are anticipated as most recognise the need for some form of agile working. Desk booking systems are helping occupiers track how much space is being used before making further adjustments.
"We expect lease events to trigger more requirements further down the line, with occupiers seeking to upgrade their space to offer staff the best working environments they can afford. For now, there are welcome signs of a return in occupier confidence that is translating into a steady increase in enquiries and lettings."
