Reading: Co-working on the way as town-centre office scene turns positive

After a topsy-turvy 2016, the Reading office market has opened brightly in 2017, with a number of much heralded new developments finally coming on stream and fuelling new demand, according to the latest market commentary by agents Hicks Baker.

The previous 12 months was book-ended by quarters at the start and end of the year which accounted for most of the town’s annual take-up; the market was noticeably quieter in before and immediately post-Brexit quarters. The total take-up of office space for the year (for transactions in excess of 5,000 sq ft) was 433,000 sq ft. While slightly down on the 460,000 sq ft let or sold in 2015, this figure is still above the 5 and 10-year take-up averages for the town.

What was noticeable in 2016, however, was the stark contrast between the level of activity in the business park and town-centre markets, with out-of-town locations significantly out-performing the latter. Only 23.5% of total take-up was transacted in the town centre.

The three largest office deals in Greater Reading were all on business parks; Bayer’s and Thales’ acquisitions of substantial HQ buildings at Green Park (totalling around 190,000 sq ft and both completed in January) and Beckton Dickinson’s acquisition of 44,557 sq ft on a new lease at 1030 Winnersh Triangle.

In contrast, the town centre was more muted, with only one transaction over 10,000 sq ft all year. There were, however, multiple deals in buildings such as One Valpy Street, Fountain House and The Blade typically in the 6,000 sq ft to 8,000 sq ft range. The signs are that the majority of demand will remain in smaller deals, with anticipated major requirements and relocations likely to be few and far between.

This does not, on the face of it, auger well for the town-centre market in 2017 where, in addition to the existing Grade A stock, four major new developments will reach practical completion. Thames Tower (186,000 sq ft) and The White Building (93,145 sq ft) are due for completion in March; the former Alpha Building at 121 Kings Road (now rebranded as Kennet Place) is also undergoing a substantial refurbishment and will deliver a further 69,462 sq ft to the market in June. Finally, waiting in the wings is 2 Forbury Place, the latest phase of M&G’s development due for completion in August. The button was pressed on this speculatively following the successful pre-let of its sister building to SSE in 2015 and, at over 195,000 sq ft, will be the largest new building in the town.

Given the substantial amount of investment that has been made in the Reading market, 2017 will be a crucial year for the town centre. The initial signs are, however, encouraging. Landid and Brockton have announced Austin Fraser as the first tenants at Thames Tower prior to practical completion and a further 58,000 sq ft is reported to be already under offer to six separate tenants, including a restaurant and a café operator on the ground floor. Likewise at The White Building on Kings Road, Boultbee Brooks have already announced three pre-lets to Herjavec, Work:Life and Pharmacosmos and are in advanced negotiations with a number of further tenants.

One notable trend in Reading has been the perceived value added by the availability of additional amenities and facilities to office users. M&G has installed a café on the ground floor of 3 Forbury Place and, in addition to its restaurant and cafe offer, Thames Tower is making much of its shared tenant space on the 14th Floor with spectacular views over the town. At both Thames Tower and The White Building, collaborative co-working space is also being offered. The concept is, however, not only restricted to major schemes and a further co-working concept is also due to be launched at 58 Kings Road later this year.  

These all illustrate the current popularity of concierge and other facilities which create a vibrant atmosphere and collaborative working environment which is increasingly attractive to a wider range of businesses (and not only those with a younger staff demographic). It will be interesting to see whether such facilities will continue to be a major factor and a key differentiator upon which Reading office occupiers will make relocation decisions in 2017.