'Occupiers in South East will move further to secure better office space' - Savills

The latest report on the Greater London and South East office market from real-estate advisor Savills has revealed that there is a growing trend of occupiers prepared to relocate further to secure grade A office space.

In the past two years occupiers have relocated, on average, 4.7 miles for grade A office space. Comparatively the average relocation distance for less pristine office space was 3.3 miles. On top of this 40 per cent of occupiers are relocating to a new town to secure best in class space.

Some specific examples include ID Business Solutions relocating 7.5 miles to Space, Woking, and leasing 19,350 sq ft; and ENRA who moved from Borehamwood to Hyde, Watford, relocating 7.5 miles and leasing 19,663 sq ft.

The number of best in class office spaces is diminishing, only five submarkets in the Greater London and South East office market have three or more buildings that are able to satisfy a requirements of over 50,000 sq ft.

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Director in the Greater London and South East office agency team at Savills Stuart Chambers said: “This research demonstrates that occupiers are increasingly prepared to extend their area of search in order to secure prime grade A office space that has strong ESG credentials and a broad amenity offer. This trend was evident in 2022, with 68% of take-up recorded being grade A standard, which was the highest proportion since 2018.

“Additionally, landlords who deliver prime grade A office space will benefit from the improved demand prospects for this product as well as significant rental growth. Occupiers are generally less rent sensitive and this was evident in 2022 with 11 submarkets achieving record high headline rents.

''Furthermore, on average, the rent per sq ft paid by occupiers increased by 37% when compared to their previous lease, highlighting that occupiers are prepared to pay premium rents to secure the best quality office space. Despite the subdued take-up experienced in Q1 23, the prospects for improved corporate activity is positive with 23 requirements over 20,000 sq ft and 14 over 50,000 sq ft.”

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