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Virgin Media leads upturn in South East office hunts

By Paul Norman - Monday, February 12, 2018 15:00

South East office occupiers’ hands are now "being forced by a combination of diminishing Grade A supply and lease events" as well as a trio of requirements totalling in excess of 350,000 sq ft from Virgin Media, Novartis and Samsung all expected to take out space in the near term.

According to DTRE's first South East office market report, the year has already seen Samsung, Virgin Media and a pharmaceutical group understood to be Novartis active in the market, seeking more than 120,000 sq ft each. 

DTRE writes: "The supply picture could further diminish very quickly. These occupiers will be forced to act swiftly, as the amount of Grade A space over circa 40,000 sq ft is limited, with little in the way of new developments coming through."

Virgin Media, advised by Savills, is understood to be scouring the M4 from Reading through Slough to Heathrow, for a circa 120,000 sq ft office. It is based at 10-14 Bartley Way, Hook at present.

Korean electronics giant Samsung, which is behind the Galaxy smartphone, has a UK head office at Samsung House, 1000 Hillswood Drive Chertsey, Surrey as well as occupying space at The Heights in Weybridge in Surrey. Advised by Matthews & Goodman it is understood to be whittling down options for an 120,000 sq ft requirement with a view to moving by first quarter 2019.

Cushman & Wakefield is advising a pharmaceutical group understood to be Novartis on a requirement for a similar size in the Thames Valley.

According to DTRE South East office take-up reached 3.2m sq ft in 2017 – down 5% overall on 2016 and 13% down on the 5 year average.

The Thames Valley dominated and accounted for circa 52% of all deals by sq ft with 85% of all the space taken in the Thames Valley being of Grade A quality – "demonstrating occupiers' desire to acquire the best buildings in core locations, in order to attract and retain the best staff".

There were just five deals greater than 50,000 sq ft recorded in 2017 – the poorest take-up of bigger floorplates since 2009, "signifying occupiers’ unwillingness to commit to large chunks of space throughout 2017, as the political fallout from Brexit continued to take shape".

DTRE said within this environment it anticipates that the South East occupational market will witness a strong first half of 2018.

"Early activity would suggest that occupiers are becoming more aware of the declining level of Grade A supply, particularly at the larger end of the market. In certain markets, tenant displacement due to permitted development is likely to continue, further reducing stock levels."

DTRE said the investment market bounced back in 2017 as £3.6bn transacted across South East offices. Volumes were up 18% year-on-year and 35% ahead of the five-year average.

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