The latest research by property consultancy Glenny LLP reveals that office and industrial markets in London and the South East have seen take up remain at or above long-run trend levels of activity, despite the continued tightening in supply.
The industrial market saw take up reach 8.1 million sq. ft. in 2016, despite availability levels remaining historically low.
John Bell, Managing Partner at Glenny and Head of the Business Space Agency division, said: “We have seen one of the strongest ‘bull runs’ in the Eastern M25 industrial market on record, with take up remaining at or above trend levels in each of the past four years. Last year was boosted by the exceptional pre-let at London Distribution Park, where Amazon agreed to lease a 2.2 million sq. ft. fulfilment centre.”
Occupiers are going to have to follow this trend in the coming 12 months, with a lack of supply likely to prove a stumbling block when looking for ready-to-occupy space.
Bell said: “Across the whole of the Eastern M25 region there are only 14 buildings above 100,000 sq. ft. that are ready to occupy, and six of these are considered to be grade A space. At the end of Q1 2017, we had more than 11.8 million sq. ft. of requirements registered on our systems, with more than 25% of these requirements for larger buildings.”
The mismatch between supply and demand has resulted in a strong upturn in prime rents, with most locations seeing values reach record levels and growth averaging 8.1% per annum since the end of 2013.
The Eastern M25 office market has followed a similar trend, bolstered by Stratford’s emergence as a serious option for many Central London occupiers who are shying away from the costs of occupying space in more traditional locations.
Bell commented: “The Eastern M25 market has been boosted by the emergence of Stratford International Quarter and the new development around the Queen Elizabeth Olympic Park.
In addition, there is a further 3.3 million sq. ft. of space due to come on stream at ABP’s new Royal Albert Docks scheme.”
The emergence of new East London office locations has supplemented the established Docklands market, which boasted the news that the government will relocate some 5,700 members of staff to their new offices in the former Barclay’s building at 10 South Colonnade, E14.