Reading Offices Market Watch January 2016pdf.savills.com/documents/Reading Office Market... ·...
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savills.co.uk/research 01 Reading Offices Market Watch January 2016 Snapshot of deals, supply and rents n The Reading office market has been the strongest performer in the South East in 2015 where 532,769 sq ft of take-up was recorded. Take-up for 2015 was a 29% increase on the five year average. The increasing demand for office space, both within the Thames Valley as well as locally, is apparent in the fact that take- up has increased year on year since 2011. SSE leasing 185,000 sq ft at M&G and Belhammer's speculatively developed 1 Forbury Place, was the biggest deal in 2015. This was the largest deal in the Reading in town market for 25 years and highlights Reading's ability to satisfy large spatial requirements and accommodate corporate headquarters. n The Reading in town market was the preference of occupiers in 2015 where it accounted for 378,000 sq ft of take-up which equates to 71% of space transacted. Even if the SSE deal is removed from the total figure the in town market still prevails as the dominant market, it would still account for 55% of total Reading take-up. The continual improvement in the economy combined with the lack of grade B stock available, saw 376,400 sq ft of grade A space transacted which was the highest amount since 2000. n We expect the positivity encapsulating the Reading market to continue into 2016, there is currently 220,000 sq ft understood to be under offer which should complete before the end of Q1 2016. Bayer and Thales are both rumoured to be under offer at 350 Longwater Avenue and 400 South Oak Way at Green Park respectively. These two deals are 80,000 sq ft and 110,000 sq ft which emphasizes Reading's appeal to larger footloose corporate occupiers. The most notable requirement that is currently in the Reading market is EY who are looking for 60,000 sq ft. Further demand is expected for the new grade A stock that will come to the market in 2016 such as R+ and The White Building. n Supply in Reading currently stands at 1.5 million sq ft and 55% (869,370 sq ft) of this is of grade A quality. However given the current occupier preference for grade A space, we are confident that the market is capable of absorbing this available grade A stock. Permitted development rights have continued to see a reduction in poor quality grade B and C available stock. A notable building lost to residential use in 2015 was RG2 (former Yell House). n Roc Search are rumoured to be currently under offer on the top floor of the Blade and when this completes this will be the highest rent achieved in Reading for this current cycle at £34. Expected lettings at R+ (PC Q1 2016) and Thames Tower (PC Q1 2017) will further set a new rental tone for the Reading market with prime rents expected to reach at least £35 and £33 per sq ft for in and out of town markets by the end of 2016. Reading reinforces its identity as one of the core office markets outside central London in 2015. Source: Savills Research Source: Savills Research GRAPH 1 Take-up by grade Source: Savills Research GRAPH 2 Availability by grade GRAPH 3 Reading prime rental forecasts Savills World Research UK Commercial
Transcript of Reading Offices Market Watch January 2016pdf.savills.com/documents/Reading Office Market... ·...
savills.co.uk/research 01
Reading OfficesMarket Watch January 2016
Snapshot of deals, supply and rents
n The Reading office market has been the strongest performer in the South East in 2015 where 532,769 sq ft of take-up was recorded. Take-up for 2015 was a 29% increase on the five year average. The increasing demand for office space, both within the Thames Valley as well as locally, is apparent in the fact that take-up has increased year on year since 2011. SSE leasing 185,000 sq ft at M&G and Belhammer's speculatively developed 1 Forbury Place, was the biggest deal in 2015. This was the largest deal in the Reading in town market for 25 years and highlights Reading's ability to satisfy large spatial requirements and accommodate corporate headquarters.
n The Reading in town market was the preference of occupiers in 2015 where it accounted for 378,000 sq ft of take-up which equates to 71% of space transacted. Even if the SSE deal is removed from the total figure the in town market still prevails as the dominant market, it would still account for 55% of total Reading take-up. The continual improvement in the economy combined with the lack of grade B stock available, saw 376,400 sq ft of grade A space transacted which was the highest amount since 2000.
n We expect the positivity encapsulating the Reading market to continue into 2016, there is currently 220,000 sq ft understood to be under offer which should
complete before the end of Q1 2016. Bayer and Thales are both rumoured to be under offer at 350 Longwater Avenue and 400 South Oak Way at Green Park respectively. These two deals are 80,000 sq ft and 110,000 sq ft which emphasizes Reading's appeal to larger footloose corporate occupiers. The most notable requirement that is currently in the Reading market is EY who are looking for 60,000 sq ft. Further demand is expected for the new grade A stock that will come to the market in 2016 such as R+ and The White Building.
n Supply in Reading currently stands at 1.5 million sq ft and 55% (869,370 sq ft) of this is of grade A quality. However given the current occupier preference for grade A space, we are confident that the market is capable of absorbing this available grade A stock. Permitted development rights have continued to see a reduction in poor quality grade B and C available stock. A notable building lost to residential use in 2015 was RG2 (former Yell House).
n Roc Search are rumoured to be currently under offer on the top floor of the Blade and when this completes this will be the highest rent achieved in Reading for this current cycle at £34. Expected lettings at R+ (PC Q1 2016) and Thames Tower (PC Q1 2017) will further set a new rental tone for the Reading market with prime rents expected to reach at least £35 and £33 per sq ft for in and out of town markets by the end of 2016.
Reading reinforces its identity as one of the core office markets outside central London in 2015.
Source: Savills Research
Source: Savills Research
GRAPH 1
Take-up by grade
Source: Savills Research
GRAPH 2
Availability by grade
GRAPH 3
Reading prime rental forecasts
Savills World Research UK Commercial
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Market Watch | Greater London & South East Offices
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Jonathan GardinerHead of South East Offices+44 (0)20 7409 [email protected]
Simon PreeceResearch+44 (0)20 7409 [email protected]
Steven LangResearch+44 (0)20 7409 [email protected]
Olivia WoodAssociate+44 (0)20 7409 [email protected]
Andrew WillcockDirector+44 (0)20 7409 [email protected]
Alys HollandSurveyor+44 (0)20 7409 [email protected]
Tom MellowsDirector+44 (0)20 7409 [email protected]
Rob PearsonSurveyor+44 (0)20 7299 [email protected]
Key Occupier Data
Current supply (over 5,000 sq ft):1.55m sq ft
Grade A supply (over 5,000 sq ft): 869,370 sq ft
2015 Take-Up (over 5,000 sq ft):532,679 sq ft
Five year average annual take-up (over 5,000 sq ft):377,666 sq ft
In Town Take-Up (over 5,000 sq ft):2015- 378,423 sq ft (71%)Five Year Average- 145,565 sq ft (39%)
Out of Town Take-Up (over 5,000 sq ft):2015- 154,256 sq ft (29%)Five Year Average- 232,101 sq ft (61%)
Definitions & statistical notes
Property criteria Transactions and supply recorded for units in excess of 5,000 sq ft
Grade A
All new development (including specu-lative schemes reaching practical completion within six months, plus major refurbishments)
Grade B Space previously occupied, completed or refurbished in the last 10 years
Grade C Space previously occupied, completed or refurbishment more than 10 years ago
MAP 1
Savills M25 market area
Piers NickallsDirector+44 (0)20 7409 [email protected]
