The South East
In My View by Russell Mogridge, Head of Office & Industrial Agency for Vail Williams across the South East and Midlands.
CPM: How is the office agency side of things in the South East – lettings and acquisitions/disposals in particular? Russell: We are seeing occupier demand for smaller leased offices as the hybrid working model appears to be embedded following the pandemic – and average length of leases tend to be a little shorter too as a consequence. Landlords need to be aware of this trend. Demand for office quality, providing staff with a
compelling reason to come into the office, continues to grow – there is a lot of interest in Grade A+ stock and landlords who don’t invest in the wow factor will be sitting on vacant space. There isn’t much freehold availability for quality office space – we have been instructed on numerous occasions to search and acquire by growing businesses, usually off-market. In Reading, for prime stock, rents have been hitting £50 per sq ft.
CPM: Can you provide an example of an off-market freehold purchase? Russell: We identified an off-market freehold opportunity for demolition specialist Hughes & Salvidge, which acquired Leroux House, a detached 6,209 sq ft office on the 400-acre private office campus at Cams Estate, Fareham, near Portsmouth. It is now the company’s global headquarters.
CPM: What about the industrial/warehouse side of things?
Russell: First, it is rare to see the freehold of a good quality industrial unit on the open market – very few buildings are vacant because occupier demand exceeds supply across the South East. Internet shopping drives last-mile logistics in a way few of us would have imagined just a few years ago. There is simply insufficient stock – speculative developments have quickly earned their keep with occupier demand. For example,
Concorde Park, with 10 units from 3,000 sq ft to 20,000 sq ft, just off the M27 near Portsmouth, rapidly achieved 75% occupancy before owner developer Kingsbridge sold to Nottinghamshire County Council Pension Fund. Secondly, there is a trend for occupiers to relocate to industrial workspace which is energy efficient and sustainable – staff no longer want to be working in cold, leaking premises, tenants don’t want to be paying sky-high energy bills and customers expect greener.
CPM: What about ‘stranded assets’ – what’s the future there? Russell: Where there are ageing Grade B offices, and the landlord doesn’t have the capital to refurbish to market expectations, and it is a struggle to let, then disposal for residential development may well be the last option for these kinds of stranded assets, subject to any Article 4 Directions from the local authority. A significant portion of Grade B office supply in the South East could be repurposed for alternative uses; we are engaged in a lot of options analyses in this area currently for landlords and investors. We are also seeing larger scale office parks being redeveloped for industrial & logistics where they have good motorway access - we are representing a number of national industrial developers seeking these opportunities.
CPM: In a nutshell, as a commercial property landlord, is the [expensive] retrofit sustainability card one that will play out? Russell: No. Thankfully, it is here to stay. Millennials, Gen Z and now Gen Alpha [born between 2010 and 2025], demand that we grown-ups all take responsibility for the future – and now. That means commercial property buildings must aim to become self-generated clean, green energy sources, including photovoltaic panels and with energy-efficient heating and cooling, along with greywater harvesting, electric vehicle charging points, cycle parking, garden sponge soakaways for rainwater runoff, permeable hardstanding and mixed deciduous tree landscaping to create shade during heatwaves.
In My View – Shane Prater MRICS, Quintons Commercial Property Agents, Newbury
2024 or
has, not, believe been it more
turbulent than the Covid years in the property market in and around West Berkshire. The sudden interest rate rise in October 2023 caused an
initial the slump commercial in sales
market, this has since recovered but yields have risen due to the increased cost of borrowing.
In general:- •
The retail market is buoyant,
established retailers continue to expand and renew leases with start-up ventures / local occupiers filling the smaller vacant units.
•
The industrial / warehouse rental market has slowed from its peak in early 2024, take up is lower to date but supply of space remains limited in the area so rental values are holding up.
•
The office market is still very much in recovery mode, take up is low. Working from home has had an impact on take up but the office market has been in decline since 2015.
Conversion of the older
office stock to residential has been prevalent with more than 1 million square feet lost to date. The conversion of older buildings has left the modern office stock available to occupy which generally suits today’s business occupiers better by offering more accessible
space (i.e. buildings
with lifts), better energy efficiency, more sustainable locations (town centre, business parks which are accessible by bus and train) etc.
The outlook for West Berkshire, which
includes Newbury, Thatcham,
Hungerford and parts of Theale and Pangbourne is rosy. Take up is positive, therefore void periods are reduced and in some cases we are having to go to sealed bids. Love them or hate them it shows in certain sectors the market is extremely buoyant but pricing is still key!
Valuation specialist Huffer joined the firm as a senior member of the Daniells Harrison team, which was acquired by fast- growing Eddisons in 2022 and employs 27 people across its Fareham, Bournemouth and Isle of Wight offices.
Part of a programme of 17 promotions across the firm nationally this month, Huffer’s promotion to the new South Coast role comes as Eddisons continues its aggressive growth strategy. The business has made 10 acquisitions since 2015, four of which were completed in 2023. It now employs around 500 people across 30 UK offices.
Hampshire-based Eddisons director Chris Daniells said: “Congratulations to Richard on his well-deserved promotion to regional director. Eddisons is one of the fastest growing property firms in the UK and that is undoubtedly down to the excellence, expertise and passion of our people”.
46 COMMERCIAL PROPERTY MONTHLY 2024
Eddisons Creates New Regional Director Role for South Coast
Property group Eddisons has promoted Richard Huffer to regional director, a new role spanning its Hampshire offices.
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