Is the South East Office Market Looking Strong in 2016?

Posted on 11 May, 2016 by Chris Grigorovsky

The first quarter of 2016 was a great one for the South East office market, which saw its total take-up increase by 30%, according to Knight Frank’s latest M25 offices report.

Modern Office Interior

It was found that 973,000 sq ft of space was let during this period, 10% above the ten-year average. This has resulted in the overall supply being at an historical low, with availability throughout the South East markets being 25 to 30 per cent below the long-term trend.

In 2015 there were record investment volumes and Q1 2016 was no different, with £494 million of investment recorded, which is consistent with the 10-year average.

From the middle of the year, Knight Frank has predicted an increase in transaction volumes and is expecting investment volumes to be near £2 billion by the end of 2016.

Head of National Offices at Knight Frank, Emma Goodford, commented: “Overall take-up in the first quarter has been encouraging, particularly set against increased market anxiety relating to the EU referendum.”

Goodford goes on to say that despite the pending referendum holding decisions back, “we continue to see interest is still rising from a diverse array of occupiers with active named demand topping 6.6m sq ft.”

She adds: “With this in mind, we are predicting strong rental growth in key locations, particularly where new development is accompanied by infrastructure and amenity improvements.”

Tim Smither, Knight Frank’s Head of National Offices Investment, said: “The weight of capital targeting opportunities in the South East remains robust; whilst some investors pause to await the outcome of the EU referendum, others are seeing opportunity.

“In particular, high yielding, asset management opportunities remain keenly sought after, supported by a strong rental growth outlook for the region.”

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