34 property


Office supply shortage becomes critical


According to quarterly research released by Lambert Smith Hampton (LSH), the South Coast office market is in supply shortage due to increasing demand.


Significant South Coast office occupier activity in Q1 delivered an emphatic start for 2015 and overall supply fell by 14% along the M27 corridor. As a result, prime rents are on the rise, both in town centres and out of town.


Andrew Hodgkinson, director of office agency for LSH, explained: ”With a continual trend of falling supply, possibly to a level below 1,000,000 sq ft in 2015, we anticipate prime rents may breach £20 per sq ft. Investors have been hesitant to purchase in the first quarter, largely due to the imminent election and the uncertainty surrounding it, further increasing the pressure.”


Q1 office take-up provides a strong start to 2015


Take-up figures soared in the first quarter of 2015, thanks to some significant office lettings along the South Coast. Over 190,000 sq ft of transactions completed in Q1 2015 – double the 10-year quarterly average and five times greater than the take-up figures for Q1 2014. In large part, this was due to the 70,310 sq ft letting of Forum 1 on Solent Business Park to HSBC.


Twelve deals were recorded for the quarter (above 2,500 sq ft), which represented a fall from the 20 deals transacted in Q4 2014, however the average deal size was in excess of 15,987 sq ft, representing almost a three-fold increase.


South Coast office enquiries up by 10%


The number of enquiries has increased by 10% from Q4 2014 to 52 and new requirements have been recorded for office space in excess of 50,000 sq ft, both highlighting continued demand from corporate occupiers.


Overall supply falls sharply


Office supply fell to 1.301,000 sq ft in Q1 2015. This represented a 14% fall in supply in a single quarter. We anticipate this trend to continue and it is possible that supply may fall below 1,000,000 sq ft by the end of 2015.


Prime rents on the rise


With occupier demand continuing to improve, we are now seeing prime rents increasing, as predicted, with £19 per sq ft being achieved both in the city centre and along the M27 corridor.


As supply continues its sharp descent, in particular grade A space, prime rents could now breach the £20 per sq ft barrier by the end of 2015.


Quiet Q1 for South Coast office investment market


While the South Coast office market proves popular with investors outside of London, there has been only one significant office investment sale completed in Q1 2015. Investors appear hesitant to purchase due to the imminent election and the uncertainty surrounding it.


This factor, coupled with the lack of good quality office stock, as well as the number of buildings being lost to residential use as reported in our last pulse, has resulted in just one transaction taking place.


Evidence suggests that there is still a degree of caution when it comes to business parks in the region.


Key investment deals of Q1 2015


Carnac House, Carnac Court, Fareham was sold by St John‘s Income Fund for circa £2.18 million reflecting a NIY of 8%.


Carnac House has a floor area of 10,512 sq ft and is let to The Injury Care Clinics at a current passing rent of £185,000 with an unexpired term of 10 years.


£4.5m to change the face of Boscombe


A major project to demolish then rebuild an entire street block in Boscombe has begun – and when finished the apartments will be for the exclusive use of over-50s.


DWP Housing Partnership, Dorset‘s biggest private landlord, is investing £4.5 million in the regeneration scheme on Christchurch Road.


When completed (pictured above) there will be six two-bedroom apartments, 45 one-bedroom apartments and eight retail units within the four- storey, brick-built block.


South Coast Demolition is currently dismantling the existing property brick-by-brick and Glossbrook Builders will then begin the development phase.


Work is due to be completed in the autumn of next year, and will bring a more attractive look to the street opposite the entrance to the Woodland Walk.


The site is at 752-778 Christchurch Road and Steve Wells, who heads DWP Housing Partnership, said: ”We have owned this block for some years. It had been developed in an ad-hoc way, which meant there was a poor use of space. We wanted to start again and so we applied for permission to demolish and rebuild, and our plans were approved.


”We are working alongside the Boscombe Regeneration Project and will continue to build new, attractive homes and upgrade our existing stock.


”The Christchurch Road site is on the major arterial route into Boscombe from the Pokesdown end and when completed it will be far more attractive.”


Over the past five years, DWP Housing Partnership has invested more than £20m in new developments.


www.angusthomas.com studio@angusthomas.com Angus Thomas - Getty Celebrity & Entertainment


www.businessmag.co.uk THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JUNE 2015


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40