According to Savills, the Essex office market has seen record Grade A rents achieved along the A12 corridor in Brentwood, Chelmsford and Colchester as occupier demand remains strong in the face of decreasing supply.
This rental growth can be attributed to continued Permitted Development Rights (PDR) activity in the region, which has seen more than 350,000 sq ft (32,516 sq m) of office space converted to residential in the past five years.
Key deals for the region in 2018 included Sky leasing 39,490 sq ft (3,668 sq m) at Stone Cross in Brentwood, a private occupier taking 4,500 sq ft ( 418 sq m) at 96 Victoria Road in Chelmsford and Colchester Borough Council’s 10,000 sq ft (929 sq m) pre-let to Aston Scott in Colchester.
All three deals, secured by Savills, achieved record rents of £28.25 per sq ft (£304 per sq m), £27.50 per sq ft (£296 per sq m) and £18.50 per sq ft (£199 per sq m) respectively. What’s more, with zero speculative development currently in the pipeline, the firm anticipates that prime rents in Western Essex are likely to top £30 per sq ft (£344 per sq m) by 2020 as a result of limited new supply.
This rental growth is not unique to new stock, secondary office space has also seen similar increases. For example, the recently refurbished Halford House in Chelmsford achieved rents of £19 per sq ft (£204 per sq m), almost 12% up on 2017 figures.
Mike Storrs, associate director in the business space agency team at Savills Essex, comments: “The Essex office market continues to remain a strong option for occupiers looking for good quality space within close proximity to London, however supply constraints are likely to hamper take-up moving forward. As a result, we believe that conditions are now right to attract investors and developers to the region who are seeking both refurbishment and development opportunities. This new injection of stock will likely boost rents further still as we head into 2020.”