Chartered Surveyors & Property Consultants

Swindon Office Market Review – Summer 2017

News

Swindon Office Market Review – Summer 2017

Since our last review in Autumn 2016 the Swindon office has remained rather subdued in terms of activity and lettings. Take up to end of Q2 of this year is unlikely to reach more than 40,000 sq ft which in part reflects a nagging lack of confidence in the service sector. This has been our experience since the UK voted to leave the EU approximately one year ago.

In terms of specific activity this year, it is worth noting that all but two of the 10 office transactions have been within the SME sector, namely at 5,000 sq ft and below. Encouragingly, several of these are companies new to Swindon, as opposed to existing occupiers expanding within the town and this should be seen as a positive.

We have not seen the completion of a large scale corporate deal since our last market review, but that is not to suggest a complete lack of activity in this sector. What is apparent is that corporate occupiers are exercising caution in their decision making, at least in terms of their property strategy. This is manifesting itself in a long and drawn out “enquiry to signature” process which can prove frustrating for Landlords.

It is also worth mentioning that there are a number of large scale office requirements circulating within the town which are as yet unsatisfied and which in all likelihood are probably likely to land no sooner than 2018/2019. When and if they come to fruition they will prove to be major deals for Swindon and will have a dramatic and positive effect on take up figures.

Availability of office stock remains at the lowest level for 15 years having just dropped below the 600,000 sq ft mark. Despite subdued activity, a lack of existing stock and dearth of any speculative office development is resulting in rents continuing to hold up at headline levels of £17 – £18 psf pax. Incentives are also still limited in scale compared to those on offer 2-3 years ago.

Forward thinking Landlords are now taking account of this lack of quality stock, especially that which is available to the corporate sector and a clear example of this is the refurbishment of Cherry Orchard East at Kembrey Park in Swindon. This building has just been refurbished to Grade A standard and can offer up to 30,000 sq ft of space. Whilst enquiries are currently limited, any occupier seeking space of this size and quality will not be spoilt for choice. As such, the policy of speculatively refurbishing this building should pay dividends for Canmoor, the owners of Kembrey Park, when new enquiries of this size and nature come forward.

In addition to this, Forward Swindon has now commenced the 1st phase of the Carriage Works redevelopment close to the railway station in the town centre. This project will see the phased refurbishment of the former workshops built by Brunel to assemble the train carriages into space for the digital arts, learning and creative industries, set within the Railway Village Conservation Area. This is an important step in widening the appeal of Swindon to SME’s in this sector, where previously choice has been very limited.

Given the market dynamics, my opinion is that it is unlikely we will see any speculative development of new offices over the next 2-3 years, or at least until market rents break the £20 per sq ft mark.

Design and build and pre let agreements are therefore likely to be the only options for an occupier seeking a brand new building and companies will need to take into account the inevitable time lag to ensure a smooth relocation process. Typically this would take 12-18 months from agreement of terms to the delivery of a completed building and occupiers will need to factor this in to their business plans.

It is our view that the office market will remain somewhat subdued for the foreseeable future, but lack of existing stock and any speculative development will ensure the market remains robust and rents remain at or close to their post recession peak.

For further detailed information on the office market please contact Bradley Forbes on (01793) 423344 or bradley@loveday.uk.com

Make an Enquiry

Go back