Slough OfficesSPOTLIGHT

Savills Research

UK Commercial – June 2019

Key Statistics Occupational Overview Investment Overview Outlook

Slough experienced strong levels of occupier demand in 2018 with 299,000 sq ft transacted and was the highest level since 2005. This was a 191% increase on 2017 and 169% above the long-term average. The high levels of take-up were driven by Slough Borough Council purchasing 25 Windsor Road which comprises 110,000 sq ft for their own occupation. Furthermore, Stanley Black & Decker, Orange and Indivior all each leased over 20,000 sq ft in 2018 highlighting the corporate demand present in the market. At the end of Q1, only 9,429 sq ft has been transacted in Slough.

The new developments in the town centre and at Bath Road Central have experienced good levels of demand. Slough has the highest concentration of global

headquarters outside of London and these occupiers are loyal to the town and willing to upgrade their current office space and pay higher rents in order to remain in Slough. This was exemplified by the three aforementioned deals with each occupier previously being based in Slough and they have committed their long-term future to the town. The theme of existing occupiers in the town, upgrading their office space has continued into 2019 with Page Group leasing 9,429 sq ft at LaSalle Investment Management’s The Switch. They are relocating from Wellington House.

There was a rise in activity from serviced office operators in Slough in 2018 with four new centres opening. Citibase, Central Working, Spaces and Orega all

opened new centres totaling a combined 83,000 sq ft, which accounted for 28% of all market take-up in 2018. Supply in the market is at its lowest level since 2000 with 578,000 sq ft of all grades currently available. It is expected that supply will continue to fall in the market as there is currently no speculative development taking place and there are limited office development sites in the town centre.

The specification of the new development has resulted in higher than expected rental growth. Prime rents currently stand at £36.00 per sq ft which is a 22% increase from 2016.

Slough is a key office centre in the Thames Valley with corporate demand present in 2018 and set to continue in 2019

The high specification of the new developments delivered in the current cycle is unprecedented in Slough. These new buildings have attracted both existing occupiers and inward movers to Slough.

SLOUGH KEY STATS Data for deals and supply above 5,000 sq ft

299,000 sq ftTransacted across 10 deals in 2018

578,000 sq ft38% of the available space is classified as grade A

0 sq ftThere are currently no new schemes under construction

£36.00 psfThis rent was achieved at The Porter Building

Take-Up

SUpply

DevelopmenT pipeline

prime renTS

key occUpaTional DealS

Slough Borough Council109,000 sq ft25 Windsor Road

Stanley Black & Decker47,000 sq ft270 Bath Road

Spaces32,000 sq ftThe Porter Building

Orange22,000 sq ftThe Porter Building

Indivior21,000 sq ft234 Bath Road

fronT coverSavills are marketing 45,000 sq ft at 234 Bath Road, Slough. The new development achieved practical completion in 2016.

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sq

Ft

Grade C Grade B Grade A

The rental growth the market is experiencing will be attractive for investors seeking refurbishment and development opportunities

Slough Take-Up Take-up in 2018 was 191% above 2017 and 169% above the long-term average

Source Savills Research

1savills.com/research

Slough Offices - June 2019

savills.com/research

Occupational Overview

1 After very strong demand in 2018, we expect take-up to be

more in line with the long term average. The above average demand from the serviced office sector is unlikely to be replicated in 2019.

2 Corporate demand is set to continue in Slough in 2019.

AkzoNobel are set to be active in the market.

3 We expect premium rents on smaller deals in 2019. Yitu

paid £37.50 per sq ft at The Porter Building in 2018 where they leased 4,749 sq ft which was a record headline rent for the Slough

market.

4 The telecoms industry is strong in Slough with Orange, O2

and HTC all headquartered in the town. Three Chinese technology companies have recently opened new offices in Slough these are Yitu, Oppo Mobile and ZTE. There could be further activity from the sector in 2019 as the sector seeks to realise potential synergies by clustering together.

5 Occupiers are loyal to Slough as they are attracted by the fast

connections to central London, and

the ability to recruit from a highly skilled talent pool. This provides a continued opportunity for investors to buy existing stock with asset management potential and take advantage of the current supply shortage.

Office based employment is forecast to increase by 7.7% in Slough in the next five years7.7%

38% of the available supply in Slough is classified as Grade A space.

INVESTMENT OVERVIEW

There have been no investment deals recorded in Q1 19 and there were only two office buildings traded in Slough in 2018. These were Charter Court which was bought by M&G Real Estate for £13.25 million and The Porter Building which was a bought as a part of a portfolio by Spelthorne Borough Council. The Porter Building which is a new building was speculatively developed by Landid Property and Brockton Capital. Slough is highly regarded by investors. This is reflected in the long term average annual investment volumes totalling £72 million.

Slough continues to undergo its comprehensive regeneration with approximately 30 acres of the town centre being redeveloped in the project called “The Heart of Slough” by Slough Urban Renewal. This £450 million investment will create a new commercial and mixed-use district for the area. Furthermore, there are plans to redevelop the Queensmere and Observatory Shopping Centre into a new mixed-use scheme, which will improve the retail offering.

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2007200820092010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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Grade C Grade B Grade A

38%

Slough Supply Supply has fallen by 36% from 2017 with further falls anticipated in 2019

Source Savills Research

Slough Offices- June 2019

2

What to expect from Slough in 2019?

Steven LangResearch020 7409 8738slang@savills.com

Stuart ChambersAssociate020 7075 8223stuart.chambers@savills.com

James MannAssociate Director020 7299 3049james.mann@savills.com

Jon GardinerHead of National Office Agency020 7409 8828jgardiner@savills.com

Simon PreeceResearch020 7409 8768spreece@savills.com

Tom MellowsDirector020 7409 8964tmellows@savills.com

Piers NickallsDirector020 7409 8704pnickalls@savills.com

Olivia JonesSurveyor020 7409 8708ojones@savills.com

Andrew WillcockDirector020 7299 8866awillcock@savills.com

Greater London & South East Office AgencyRob Pearson Associate Director 020 7299 3093rpearson@savills.com

Savills plc: Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. While every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.

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