Glenny’s latest analysis of the Eastern M25 business space market has revealed that after almost four years in the doldrums, the office sector in the region may be showing the first signs of recovery.
Demand for office space in the area has improved significantly in the early part of this year with around 900,000 sq ft of requirements, the highest level since early 2008. Demand is primarily focused towards the East London and North London & Herts markets.
John Bell, Head of Agency at Glenny added, “The Eastern M25 region is not noted as being a primary location for many office occupiers but the improved infrastructure and the proposed addition of Crossrail will provide many of the locations in the area with easier access into London and the Thames Valley. Our records show that demand for office floor space took a sharp upturn in the first few months of 2012 and office occupiers are looking at what the area has to offer in terms of office floor space.”
It may be too early to herald the recovery of the market as take up levels have not improved significantly and there have been false dawns in the past. The arrival of Stratford City has provided a much needed boost to the quality of office stock available in the area and Bell adds, “Stratford City has already attracted two tenants into the scheme, with Coral Bookmakers taking 30,800 sq ft and the London Legacy Development Corporation a further 21,000 sq ft. Stratford City has been the catalyst although property values in the surrounding area have also benefited.” Prime office rents in the area have now risen to £25.00 per sq ft, with Stratford City attracting a premium to the rest of the market.
Outside of the office market, industrial property in the Eastern M25 has continued to fare well with take up in 2011 reaching its highest level since the boom years of 2007/08 with activity of 7.7m sq ft. Bell adds, “The industrial sector has been a major success story in our region over the past few years with take up and demand remaining robust. The major fear for the coming months is the lack of new stock on the market as this may hold back occupier activity. We currently have an order book in excess of 5m sq ft across our markets and grade A supply is just 1.6m sq ft. Whilst some of that demand may find its way into better quality second hand space, many occupiers need a modern building constructed to an institutional specification in terms of eaves height and loading.”
Prime rents have already begun to edge upwards in the Eastern M25 industrial market and are now 3.5% above their low point in early 2010. Bell concludes by saying, “We are working hard to try to encourage some of our clients to build some new industrial and warehouse stock in our market. The fundamentals look good at the moment and the prospect for obtaining good rents on the right type of product is apparent.”
For further information or comment on this release please contact John Bell on 020 8591 6671 or at email@example.com
To download the Glenny databook Q1 2012, please register on our research page here.