South East: SMEs are biggest office movers in region

The South East business space agent said prime occupancy costs increased last quarter by 3% along the M4 corridor with spikes in Slough, up by 20% due to a choice of new office completions drawing greater demand.

RARE's report focuses on cost per seat.

Basingstoke is the next fastest riser by 15%, with Eli Lilly having agreed terms for a 45,000 sq ft pre-let and The Florence Building providing new space.

Bracknell, Newbury and the M3 towns remain the best value for money.

Good quality Grade B space is on average 20% cheaper across the board however demand is higher for Grade A as 'occupiers are not yet prepared to compromise specification or location for a relatively small saving', according to RARE.

RARE said a shortage of Grade A product combined with 94% of companies anticipating a rise in raw materials and wage costs this year means closer scrutiny will be given to reducing overheads.

RARE anticipates business will look towards "more cost-effective space as well as taking flexible accommodation to plan for uncertainty and changing working practices".

It said there was already evidence of this with EY in Reading choosing to stay in Grade B accommodation and supplementing with flexible co-working space at The White Building.

Guy Parkes at RARE said: “Despite an expectation that concerns on the impact of Brexit would slow growth, quite the contrary, we are seeing increased business optimism with 75% of businesses in the SE predicting growth in a recent survey of 480 companies (MHA 2018).”

Parkes added: “Over 50% of respondents are anticipating headcount growth in the next 12 months, however 84% say they have experienced difficulty in recruiting talent and that locating to areas with access to relevant skills is their top priority. Using specialist software we are helping occupiers identify the concentration of talent across the region as well as travel distance mapping to show potential catchment areas.”

Source: CoStar