2015 is set to be the year that commercial investors truly reap the benefits of the recovering market, with the improved economy and growing business confidence paving the way for wide scale growth in regional areas. In Swindon, this has seen an ageing office block snapped up at auction for well above the guide price as investors grab assets to prepare for an upcoming office property boom.
The as-yet unnamed investor paid an estimated £1.5 million for the Focal Point building in Fleet Street, which has lain empty since the relocation last year of specialist insurance tenant Gallager Heath.
Comprising 34,200 sq ft of office space split over five storeys, it is believed that Focal Point will soon benefit from a refurbishment programme in order to provide high quality office space in a town centre where supply is diminishing quickly.
Joint auctioneer at Swindon’s Loveday property agency, Bradley Forbes, believes that the new owner has secured an excellent deal during a “pivotal time in the office market in Swindon.”
He continues; “Our research indicates that rents will continue on an upward curve for the foreseeable future and improved rail services will have a dramatic and positive effect on the local market for offices going forward.
“Coupled with dwindling availability we are finally seeing the office market regain some forward momentum.”
Swindon has recently seen a significant uptick in the number of office refurbishments and acquisitions in its town centre, in part due to the recent electrification of the main railway line improving the area’s access to central London. This has allowed landlords to increase rents last year by an average of between 10 per cent and 20 per cent to £16 per sq ft, with town centre space even higher at £18.50 per sq ft.
Additionally, landlords are now able to cut down on incentives designed to draw in new tenants, the result being that rent free periods are exceptionally rare in Swindon.
According to the latest research by Lovedays, office take up in Swindon last year skyrocketed, with the 215,000 sq ft let during 61 transactions a significant increase from the 43 deals transacted in the previous year. This marked Swindon’s most successful annual result in six years, and was almost three times higher than the 80,000 sq ft taken up in 2011.
Available space is now down to just 750,000 sq ft – much lower than 2011’s peak supply figure of 1.07 sq ft. Furthermore, with many of the town’s 1970s and 1980s office buildings being transformed into residential schemes under permitted development rights regulations – and a distinct lack of speculative developments on the horizon – this looks unlikely to change any time soon.
Hopefully, the new owners of Focal Point will be able to act quickly and realise the potential of the strongly located property. Otherwise, Swindon may soon become yet another area in which businesses struggle to find suitable premises for expansion.
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