The South East


Navigating the Office Market Challenges in Surrey and North Hampshire By Piers Leigh, Curchod & Co


Piers Leigh is a Partner at Curchod & Co and has worked in the South East Office market for over 24 years focusing on commercial agency, investment and development. He joined Curchod & Co in July 2022 having spent over 20 years working in London for JLL and Avison Young. Curchod & Co are Surrey, South West M25 and North Hampshire’s leading Chartered Surveyors and Commercial Agents, offering, Commercial Agency, Professional, Investment and Management (Residential Block and Commercial)


services with a history dating back 1938.


As we approach the final quarter of 2024, the office property market in Surrey and north Hampshire faces unprecedented challenges. With stock levels at historic lows and prime rents on an unrelenting rise, businesses are forced to reassess their strategies amidst an increasingly competitive landscape.


Curchod & Co’s office market review for the first half of the year paints a stark picture: a severe shortage of Grade A office space across all markets in Surrey and Hampshire coinciding with a decline in new enquiries from occupiers. This perfect storm is driving prime rents upwards, a trend fuelled by build cost inflation and a shrinking supply pipeline and leaving secondary properties virtually unlettable.


Businesses now face a market with scarce high-quality office space and fierce competition. Pre-lets and forward lets are increasing, a strategy which is vital as Grade A rents keep rising, pushing businesses to adapt and strategize accordingly. Smaller markets such as Camberley, Farnham, and Chertsey are witnessing a migration of occupiers to larger, centres like Farnborough, Guildford, and Woking, where new stock, albeit limited has been delivered.


Nick Reeve, Partner, in our Farnham office notes “The Blackwater Valley’s performance in the first six-months of the year was sluggish, achieving only 35% of the five-year average take-up and the market remains quiet, with limited pipeline activity. Nevertheless, prime rents continue to rise, with over £30 per sq ft being achieved for Grade-A properties.”


Guildford, Woking, and Weybridge are leading the charge, but limited stock may slow take up down. Prime rents have hit new highs, with Guildford’s BottleWorks reaching £45 per sq ft. The biggest transaction was the 66,500 sq ft sale of Victoria Gate in Woking to Surrey County Council, showing strong demand for top-tier, ESG-compliant accommodation.


Despite current challenges, developers and investors willing to commit to new schemes in prime town centres stand to benefit significantly, with potential prime rents exceeding £50 per sq ft in the not-to-distant future. The future of the market hinges on balancing supply and demand pressures while seizing opportunities presented by evolving market dynamics.


For more detail please visit www.curchodandco.com


Woking Office Market continues to be Surrey’s standout performer


Simon Fitch of Hurst Warne, Surrey’s leading commercial property agency has sited Woking as being the region’s strongest performer. Fitch said “The Woking office market has dominated the region in terms of take-up this year. We’ve already seen 135,000 sq ft transacted in the first 6 months of the year. To put that number in perspective, the 5-year take-up average is 80,000 sq ft. Fitch continued “What is very encouraging is that Woking is attracting a


significant number of occupiers from outside the town. We’ve seen Colgate, IDBS and BOC all move from Guildford in recent years, Alliance relocate from Weybridge, Roke from the south coast and Nomad from Heathrow to name but a few”.


Asked why Woking has proved so popular he said, “the town’s success has been down to a combination of different factors. Unlike other town centres in the Surrey market, Woking has had a good supply of Grade A office buildings with Space, Goldsworth Place and Forge all offering some of the best space in the region. Woking Borough Council have also invested heavily in the town centre with their new Victoria Place development which has helped improve the amenity offer. Finally, and probably most importantly, the train station with the ability to reach London in 23 minutes is what really differentiates the town. This has attracted companies with a younger age demographic whose employees may live in locations closer to Central London.”


The challenge now faced by towns like Woking and other Surrey centres is that the supply of best-in-class office space is drying up and not being replaced. Fitch commented “The Woking office market perfectly illustrates the challenge many markets across the region are now facing. Office occupiers primarily focus on taking the best office space for a variety of reasons. They often want to provide high quality environments to attract staff back into the office and are increasingly drawn to buildings that match their own sustainability agendas. He added “Woking has only 18,000 sq ft of available Grade A office accommodation left. There is a supply a Grade B behind this, but for reasons previously mentioned, this isn’t as attractive to a lot of occupiers. Fitch went on “The concern is that the delivery of prime office space into the market will be very curtailed in forthcoming years. Unfortunately, the financial viability of office development is still very difficult to stack-up, due to a combination market, economic and build costs factors.”


Fitch concluded, “If building owners are prepared to take the plunge and commit to new developments or high-quality refurbishments, they will undoubtedly reap the rewards. To make development viable, rents need to increase accordingly. We’ve seen £45 psf recently paid at the speculatively developed Bottle Works scheme in Guildford which shows that for the best space, occupiers will pay new market rents. Landlords should also have greater certainly over void periods given the very limited competition they’ll face. Fortune favours the brave and I’m sure any landlord who does take the risk won’t regret it!”


The cost of MEES compliance and future-proofing is another formidable hurdle, eroding investor confidence and leaving the office market out of favour. Yet, for those with the expertise and boldness to capitalise on these unique circumstances, exceptional investment opportunities abound.


Keith Enters, Partner, in our Basingstoke office observes “Basingstoke’s office market saw a mixed outlook in the first half of 2024 with a take-up of 40% of the five-year average. This figure is skewed by the COVID-19 years and is down 30% on the long-term average. Despite a strong start, the subdued pipeline and declining enquiry volumes point to a potentially challenging year.”


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COMMERCIAL PROPERTY MONTHLY 2024


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