London office availability at 15-year low

London office availability at 15-year low

by Josh Casserly

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As the economy regains strength and the London office space market diversifies, the demand for commercial real estate in the capital is growing exponentially. Availability fell to a 15-year low in the third quarter of 2015 and a recent report from BNP Paribas Real Estate warned there is less than one year's supply at current levels of take-up.

Above average levels of leasing and investment activity experienced in the first half of the year carried on through the third quarter. The end of September saw take-up reach 10.78m sq ft, an 18% boost over the long-term trend, and investment volume of £11.91bn is 28% ahead of average. The report expects that end of year activity will take leasing and investment levels even further above trend.

Daniel Bayley, Head of Central London at BNP Paribas Real Estate said:

"With robust levels of demand and no further developments coming on stream this year rents are set to increase and occupiers are increasingly looking to future development pipeline to fulfil their property requirements. Increasingly they are turning their attention to non-traditional and emerging locations away from the core areas to satisfy their requirements in terms of space and value".

"Activity in was very much boosted by pre-letting activity. In total 13 pre-lets were recorded totalling 660,000 sq ft. We expect that take-up levels of this magnitude will continue in 2016 as the development pipeline starts to deliver much needed new stock."

Candidates not willing to pre-let or to hold out for new development are increasingly looking to locations further-afield, outside of the usual London office hotspots. With a growing number of more residential boroughs becoming subject to gentrification or simply being marketed as a viable venue for commercial real estate, both employers and employees are more willing to sacrifice a shorter commute for more relaxed surrounds – a prime candidate being Richmond upon Thames.

The River Thames offers a beautiful backdrop to Ebay and Graze offices

In addition to being home to e-commerce giants: Ebay, Gumtree, PayPal and Not On The High Street, a 2013 study by Google and Ipsos Mori identified Richmond upon Thames as having the highest proportion of SMEs in London. Within easy reach of central London, the leafy borough is just a 19-minute train ride from Waterloo and journeys depart almost every ten minutes. Dubbed Silicon-upon-Thames by Not On The High Street co-founder Holly Tucker, the riverside borough is the only one in London to span both sides of the River Thames. An abundance of quality pubs and restaurants – several with river views – make it an easy sell for after-work socialites and leisure-seekers. The wealth of green spaces includes the picturesque Richmond Park, Terrace Gardens and Petersham Meadows, which in addition to the river itself make for enjoyable weekends out and about for families and active types. While many believe Richmond lies in Twickenham, both are in fact towns positioned within the London Borough of Richmond upon Thames, which was created in 1965 and also encompasses Teddington, Hampton, Kew, Barnes, North Sheen and Mortlake.

The borough is home to 379,000 square metres of office space spread over 5,690 units, and rental rates can range from £10 to £39 per square feet, per annum. A haven for SMEs, 95% of the area's units employ 10 or less people, while a good selection of industrial and business parks also feature.

The recent 2015 Rugby World Cup brought remarkable investment to the area and helped raise its profile with prospective clients and employees on a national and international scale. Combining this with the serious lack of city office space suggests that if there was ever a time for businesses to consider a move to the quaint heart of South West London, then that time is now.


 
 

Written by Josh Casserly

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