The South Coast office market is healthy and delivering consistent returns on investment, according to quarterly research released by commercial property consultancy Lambert Smith Hampton (LSH).
2014 saw a 24% increase in take up which, combined with a static level of supply (and grade-A space falling to just 11%), saw prime rents coming under pressure, tenant incentives reducing and continued investment market activity.
We expect this to continue, although recent significant events in the eurozone could have an impact, especially with firms exporting to that region. Continuing uncertainty around the General Election is also likely to have an effect on demand, although we expect it to stall, rather than significantly reduce it.
Andrew Hodgkinson, associate director of office agency for LSH, commented: “2014 was a good year in terms of occupier activity, especially for larger enquiries, with significant deals along the M27 corridor. Supply was reduced further with the continued take-up of secondary stock for change of use.
"In 2015, a continuing squeeze on supply, and in particular grade-A space, will see rents rising and tenant incentives reducing, with rental values of £20 per sq ft in Southampton city centre now inevitable. Capital values are also continuing to climb as demand outstrips supply.”
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