On the morning of Wednesday 1st March around 100 leading property experts joined Carter Jonas, at its London head office at Chapel Place for the launch of its 2017 Commercial Edge reports, which detail commercial property market activity and sentiment in several key locations across the country. Hosted by Scott Harkness, head of commercial at Carter Jonas, a panel of experts from the business unveiled 2016 highlights in the Bath and South West, Cambridge, Oxford, Leeds and London commercial markets as well as forecasts for the next 12 months.
Key highlights by region:
• Office take-up reached 121,041 sq. ft. in 2016, an increase of 37% on the previous year
• Two transactions accounted for over 45,000 sq. ft. of total take-up and occupier sentiment remains positive
• Office rents are around 20% higher than a year ago with £24.50 per sq. ft. being consistently achieved for prime space in the city centre
• Pressure on the Bath office market remains due to low levels of stock available
• A surge of take-up activity was recorded in Q4 2016 with more transactions, in office and laboratory market, taking place in the last quarter than the first three quarters combined. The pattern highlights the impact of the EU referendum, and the immediate aftermath of the vote to leave, on the market with many occupiers adopting a ‘wait and see’ approach in the first three quarters of the year.
• Overall take-up of office and laboratory space fell to 662,357 sq. ft. in 2016, a decrease of 40% on 2015
• Office rents in the prime central market, around CB1/Station Road and Hills Road, are currently £37.00 per sq. ft. and are expected to increase to £38.50 per sq. ft. by the end of the year
• Average transaction site across the city marginally increased from 7,469 sq. ft in 2015 to 7,613 sqft in 2016
• The industrial market saw a 62% increase in take-up compared with the previous year - 1,500,000 sq. ft. in 2016, up from 932,000 sq. ft. in 2015, with a spread of activity across the region
• There is still an ongoing pressure on the Oxford office market due to a reduction in available space
• Oxfordshire’s commercial office market remained buoyant throughout 2016 with take-up reaching 391,264 sq. ft. compared with 405,000 sq. ft. in 2015 – a decrease of just 3.4%
• New build schemes in Oxford city centre are likely to command rents of £30 per sq. ft. and expected to act as a catalyst for wider rental growth across the region
• The year was characterised by a large number of smaller transactions, with only 11 deals exceeding 10,000 sq. ft. – the largest of which was to Sky Betting & Gaming at 6 Wellington Place
• The TMT sector accounted for 30% of take-up while professional services accounted for around 25%
• Solid demand and improving quality in both new and second hand stock has boosted headline rents which rose to £27.50 per sq. ft. (as of January 2017,) an increase from £26.00 per sq. ft. at the same time last year
• The Industrial market remains buoyant, there is a shortage of good quality modern stock with units in the 20,000 to 50,000 sqft category becoming increasingly scarce.
• Overseas investors amounted for 77% of office transactions volumes in 2016, despite a number of deals being derailed by the referendum result
• A decline in take-up across the capital is forecast to have a knock-on effect on occupational costs, with rents forecast to either fall or stagnate in several sub-markets
• Availability of good quality industrial space in London and the South East remains tight, despite an increase in development activity, placing industrial rents under pressure, with parts of the capital reaching £17.95 per sq. ft. up around 15% on the previous year
Scott Harkness, head of commercial, Carter Jonas commented: “The need for continued investment in new infrastructure and housing is central to the growth and development of our regional markets to ensure they are able to compete on a national and global basis. As with Brexit, strong political leadership and direction is essential to this process. If this momentum is maintained, then speculative development in the commercial market will follow to meet the strong demand express expressed by some sectors.”
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