Knight Frank reports boom for South East commercial centres

Regeneration and infrastructure development across the South East will drive talent to its commercial centres, especially Ealing, Maidenhead and Reading, Croydon, Watford, Oxford and Cambridge and Brighton, according to Knight Frank’s The M25 Report. Ealing, Maidenhead and Reading The completion of the Elizabeth Line will enhance office market performance, with Maidenhead and Reading in particular continuing to push office rent records to forecast new highs of £42, reflecting possible increases of 11% and 17% respectively (as of May 2017, £38 and £36.75 have been achieved). The line will also catalyse speculative new development in Ealing, with rents forecast to hit £45, having already achieved £36.25. Croydon The government’s consolidation of its public services to regional hubs makes Croydon an ideal candidate. Opportunistic investors should focus on schemes previously purchased for residential and now have renewed viability as office schemes, as rents push toward mid-£30s per sq ft. Watford There was 100,000 sq ft of take-up secured in Watford as of April 2017, against a long-term annual volume of 137,000 sq ft. This momentum is further reflected in strong demand from a diverse range of occupiers and rental growth of 13% over the last 12 months. Prime rents were previously forecast for £32.50 in 24 months’ time, but this could be exceeded, with £35 per sq ft now a possibility – an 11% possible increase (as of May 2017, rents were £31.50). Oxford and Cambridge As two markets in the centre of the knowledge economy, Oxford and Cambridge see continued research and development investment from the pharmaceutical and motorsport industries. Cambridge has already shown strong rental performance, encouraged by excellent connectivity to King’s Cross. Oxford shows a 20% rental discount to Cambridge, with performance restrained by lack of supply of development sites in the city centre. Brighton Tech and creative sectors are drawn to Brighton’s lifestyle appeal and strong academic infrastructure, according to Knight Frank. The market has a base of well-established occupiers and there is opportunity for rents to exceed £30 per sq ft. According to the report, the South East is home to more than 900,000 businesses and contributes £249bn to the economy every year, second only to Greater London. London Heathrow and London Gatwick provide the region with international connectivity, and the development of the Elizabeth line will continue to make ita key destination for international companies looking for a foothold in the UK marketplace and talent questioning the affordability of central London. To send feedback, e-mail Shekha.Vyas@egi.co.uk or tweet @shekhaV or @estatesgazette