The quantity of commercial property in the Thames Valley is set to be swelled by 207,000 sq ft of storage and industrial warehouses
, a pre-let that is being reported as ‘the largest of its type ever in Reading’. Standard Life Investments will develop the commercial property for Brakes Group, an international food supplier. The deal comes at a time when the region appears set for a ‘market recovery’, partly fuelled by a booming information and communication technologies (ICT) sector.
The agents completing the Reading deal are Lambert Smith Hamptons (LSH) and Haslams. They estimate the deal equates ‘to more than 60% of the total industrial space transacted in Reading during the whole of last year’. Securing the commercial property on a pre-let basis indicates ‘the lack of available units above 200,000 sq ft in the Thames Valley, and indeed nationally’. Planning permission for the commercial property has been granted and work is set to be completed by the end of March 2012.
Over in the Thames Valley offices sector, there are more causes for optimism. According to recent research, during the first quarter of 2011, there was a 15% increase in office take-up, although this is still down on the ten-year average. In contrast, the M4 area witnessed an 82% rise, exceeding the long-term average.
Commercial property in the Thames Valley appears to be receiving a further boost from the technology industry. The resurgent Silicon Valley, coupled with new Asian companies, led one analyst to opine that the ICT market is ‘buzzing’. The next twelve months are expected to see 50% of the demand for offices coming from companies in the ICT sector. Demand is said to focus on new and Grade A stock, which accounts for 92% of take-up. Availability stands at 5.5% and is expected to fall to 4.1% by 2013, leaving a ‘stark’ case for speculative development, according to the research.
Increased interest in out-of-town commercial property has been recognised with the Thames Valley reporting that this was responsible for 64% of its take-up over the past year. Analysts put this down to changing occupier demands, which aren’t always being satisfied by buildings in town centres.
There are predictions of a looming supply and demand imbalance in some locations, with commercial property in the Thames Valley said to be ‘without a real development surge over the last 10 years’. Those with fewer than three years’ supply of new and Grade A space include Richmond, Uxbridge, Staines, Hammersmith and Chiswick. The potential for new development is reported to be hindered by planning opportunity, funding and ownership credentials. Just 1.4m sq ft of commercial property is forecast to be completed by the end of 2013 in the region. Rental growth is anticipated to come from towns such as Maidenhead and Reading, while Slough and Bracknell are described as ‘oversupplied’.
The commercial property boom in London’s West End and City markets has meant overseas investors becoming ‘more active in the South East’, with figures showing 42% of turnover (17% excluding Chiswick park) coming from outside the UK. A combination of weak sterling and a ‘stable political climate’ are believed to be attracting investment from the Middle East.
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