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Office stock tightens in the South East

wantspacegotspace.co.uk - Office stock tightens in the South East“The availability of city centre offices is now starting to run very short”, reports Aitchison Raffety Group Director Mark Bunting. 

“The combination of the conversion of some of more dated stock to residential, noticeable upturn in demand as the economy recovers and little stock coming onto the market has led to a reduction of space on the market, particularly those reflecting reasonable value in the mid to upper teens rents for reasonable quality accommodation.  As the economy strengthens further and more office stock is taken out with the recent planning changes allowing conversion of offices to residential, we can see there being relatively little space available other than in the more expensive grade A building.  Incentives such as rent free periods or shorter term leases are now becoming rarer as landlords’ bargaining position improves and they are able to dictate terms more.”

“Whilst this is not good news for business, it must be borne in mind that office values are still cheaper now than they were in the late 1980s and 25 years of reducing or, at best flat lining, rents and prices are inevitably going to lead to less development.  The ever increase in residential (new flat values now at £500 per ft² plus) reflects such a disparity in office values (£250 to £350 per ft²) meaning that either office values need to improve or St Albans is likely to become a dormitory city.  Local planning zoning can help but the recent national office to residential conversion rules have largely usurped local authorities and the reasonableness of forcing landlords to keep lower value office use against much more
valuable residential may be questionable.

“Demand for out of town offices conversely remains slow but we are starting to see increased take-up and if the predicted increase in city centre rents takes place then the appeal of better value space out of town is likely to increase.”

“More so than ever, companies looking to move to new space in the city centre should do sooner rather than later before stock levels tighten further and prices inevitably increase.”

Posted by The Editor (wantspacegotspace) on 25th November 2013

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