Evolution of the M25 to drive talent to eight key hotspots


The evolution of the South East of England through significant regeneration and infrastructure development will drive talent to its commercial centres, especially Ealing, Maidenhead and Reading, Croydon, Watford, Oxford and Cambridge and Brighton according to Knight Frank’s ‘The M25 Report’.

Knight Frank’s ‘The M25 Report’ identifies the following hotspots for the commercial real estate investor:

Ealing, Maidenhead and Reading – The completion of the Elizabeth Line will  enhance office market performance at disembarkation points, with Maidenhead and Reading in particular continuing to push office rent records to forecast new highs of £42, and reflecting possible percentage increases of 11% and 17% respectively (As of May 2017: £38 and £36.75 have been achieved). The line will also be the catalyst for speculative new development in Ealing, with rents forecast to hit £45, having already achieved £36.25

Croydon – The Government is looking to consolidate its regional public services to fewer hubs, making Croydon an ideal candidate. Opportunistic investors should focus on schemes which were previously purchased for residential and now have renewed viability as office schemes, as rents push toward mid £30’s per sq ft. (As of May 2017: £34)

Watford – The momentum in the Watford office market is evident, with 100,000 sq ft of take-up secured as of April 2017, against a long-term annual volume of 137,000 sq ft. This momentum is further reflected in strong demand from a diverse range of occupiers and rental growth of 13% over the last 12 months, with further headroom for growth. Prime rents were previously forecast for £32.50 in 24 months’ time, but this could be exceeded, with £35 per sq ft now a possibility – an 11% possible increase (As of May 2017: £31.50)

Oxford and Cambridge – Two towns at the centre of the knowledge economy. Oxford and Cambridge see continued Research & Development investment from the pharmaceutical and motorsport industries. Cambridge has already shown strong rental performance, encouraged by excellent connectivity to Kings Cross. Oxford shows a 20% rental discount to Cambridge, with performance restrained by lack of supply of development sites in the city centre.

Brighton – Sectors such as Tech and Creative are drawn to Brighton’s life style appeal and strong academic infrastructure. The market already has a base of well-established occupiers and there is great opportunity for rents to exceed £30 per sq ft.

The South East is home to more than 900,000 businesses and contributes £249bn in economic output per annum, a contribution second only to Greater London. London Heathrow and London Gatwick provide the region with international connectivity, and the development of the Elizabeth line will continue to make the region a key destination for international companies looking for a foothold in the UK marketplace.

This increased connectivity will encourage a pool of young talent already questioning the affordability of Central London to flood to the South East markets, subsequently creating a concentration of growth in larger commercial centres.

Emma Goodford, Head of National Offices commented: “The M25 and South East market has evolved over the last 30 years on the basis of physical infrastructure enhancement. The next phase of its evolution will be driven by the demand for human capital. This brings into play those centres with strong university throughput, sense of place, connectivity, urban amenity and affordability. Our eight market hotspots reflect this.”