The Thames Valley office market is showing conflicting signals and Q2 will be key to determining its 2016 performance, according to the Thames Valley office market pulse for Q1 2016, published by Lambert Smith Hampton.
Thames Valley office enquiries in Q1 2016 were at the highest level ever recorded in a Q1 and record rents were achieved in several locations, such as Maidenhead, Guildford, Slough and Watford. On the surface, the market is looking very healthy, however, although take-up in Q1 2016 was buoyant at 522,770 sq ft, this was skewed by two large transactions and the underlying total is less positive. Q2 will set the tone for the year and early indications are that the increase in enquiries seen is not translating into a significant volume of take-up.
The limited grade A take-up in Reading town centre in Q1 is notable, given the amount of new stock becoming available. The market is pricing in a step change of demand, driven by an anticipated Crossrail driven decentralisation from London, however, there is a time lag between expectation and reality and we are likely to see this gather momentum towards the end of the year.
Nick Coote, head of the Thames Valley for Lambert Smith Hampton, comments: “The level of new enquiries is encouraging and we look to next quarters for these to move forward into take-up to consolidate the positive overall trend.”
Charlie Lake, director of capital markets for Lambert Smith Hampton, adds: “Whilst transaction volumes are down, this has yet to be reflected in pricing. Investment demand remains strong for properties with good fundamentals, with several opportunities going to best bids and exceeding expectations in recent weeks.”