Fourth quarter boosts 2018 take-up in the South East

More than 1m sq ft of grade-A space was leased in the South East in the fourth quarter of 2018, the highest amount since 2014, according to data from Colliers International. The figure was boosted by a surge in take-up from serviced offices towards the end of the year, with IWG’s Spaces brand being the most active. Overall serviced office take-up in the South East hit 569,561 sq ft in 2018, Colliers reported. Toby Lumsden, associate director at Colliers, said that 2018 had also seen a return of larger leasing deals, such as Virgin’s decision to move to Reading from Hook in Hampshire and Sanofi’s leasing at Thames Valley Park. These types of deals helped business parks outstrip take-up in towns for the second half of last year. Lumsden added that the South East market was still undersupplied, with little new development expected to begin in 2019 – and therefore he expects the “scramble” for space by occupiers to continue. Mapletree, the owner of Green Park in Reading, is one of the few planning to start speculatively building new offices in 2019. The uncertainty surrounding the UK’s exit from the European Union seems to have had little effect on investor appetite for South East offices in 2018, with total investment volumes hitting £3.5bn. Colliers reports that in fourth quarter 53 office investment transactions totalling £930m took place, a 16% increase on Q4 2017. Overall, there were 170 transactions in 2018. Demand stemmed from councils – which were the most regular buyers, accounting for 32% of transactions – followed by funds (19%), overseas investors (15%), residential developers (13%), private companies (8%), private equity (4%) and property companies (4%). There were fewer office-to-residential deals transacted in the region over the course of the year, owing to an increasingly limited pool of offices suitable for conversion, plus the declining residential sales prices in certain markets. Rob Cregeen, director, national capital markets, at Colliers International, said: “A key trend in 2018 is buyer diversity. Out of 170 office transactions there were 123 different buyers, meaning over 70% of transactions were from different parties.” Overall, the South East market remained robust last year, and with several large occupiers still looking for space in 2019 rents are likely to stay firm and the market healthy despite concerns over Brexit. To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette