In Q3, the South East office market saw over twice the number of leasing deals completed (42) than in the previous quarter (18) as take up reached 449,117 sq ft across the region.
The firm’s latest South East Office Snapshot shows that although Q3 take up was down on the 520,000 sq ft transacted in Q2, this figure was significantly boosted by the leasing of 330,000 sq ft at Ruskin Square in Croydon to the Home Office. Key transactions in the third quarter included 56,000 sq ft to Southbank University at Electric House, Croydon and a 40,000 sq ft letting to Philips at Ascent 1 in Farnborough. According to Colliers’ research, vacancy levels stand at 7.7 per cent across the South East and there is circa 350,000 sq ft of stock under offer.
Mark Taylor, from the South East Offices team commented: “Occupiers are seeking top quality space, with Grade A take up representing 60 per cent of the total volume in Q3. This is not surprising in the face of COVID-19 as occupiers are increasingly looking for fitted offices to control capital expenditure. Those properties that have facilities such as parking, cycle and changing facilities are proving far more appealing that those without, as the way employees visit and use their offices are changing.”
Investment into South East offices reached £370 million across 18 separate transactions in Q3, a five per cent increase on the £354 million transacted over 13 transactions in Q2. The largest transaction of the quarter was Straits Real Estate’s acquisition of Bourne Business Park for £76.7 million. Overseas investors continue to circle the area looking for good quality assets with strong tenant line ups due to the favourable currency markets, noted Colliers. There was only one acquisition by a local authority marking a notable shift away from being the predominant buyers of South East offices in the last three years. UK institutions were the notable net sellers of office assets in Q3.
Guy Grantham, director in the Research & Forecasting team at Colliers International, commented: “The small but noticeable increase in transaction volumes and numbers is underpinned by a continued desire for Grade A office stock with a strong covenant to provide long term security. We calculate that towards the end of the third quarter £500 million of South East office stock came to the market, however the continued uncertainty around COVID-19 will certainly impact the usually buoyant final quarter.”