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National Offices & Business Park Survey Winter 2011
Reviewing the top trends for commercial property in 2011.
Take up for 2011 totalled 4.38 million sq ft, a 6% improvement
on 2010 levels and in line with the 5 year average. Take up was
evenly distributed throughout the year with all quarters recording
in excess of 1 million sq ft, a very similar pattern to 2010 with
no single quarter out-performing significantly.
Tenants continued to demand flexible lease terms, typically 10
year leases with a 5 year tenant option to break. In under supplied
markets landlords are now beginning to take a more robust stance
and are unwilling to agree to 5 year tenant break options. Longer
leases are still however somewhat of a rarity with only 5% of take
up on 15+ year leases (233,815 sq ft in 8 transactions) and 15% on
10+ year leases (660,264 sq ft in 26 transactions).
2010 saw the out of town lose market share accounting for 54%
of total floor space against the 10 year average of 61%. 2011 saw
the return of off plan and pre-completion lettings in the out of
town market resulting in the 10 year average being exceeded and
more than regaining the market share lost in 2010 accounting for
63% of total floor space.
Whilst the average size of transaction has typically been
smaller in town than out of town, the difference between the two
during the period 2007-10 reduced significantly. 2011 saw a
reversal of this trend with the average out of town transaction
increasing by 18% on the previous year to 20,260 sq ft in line with
the 10 year average. Conversely, the average size of transaction in
town reduced by 7% on 2010 levels to 14,955 sq ft, 6% below the 10
Grade A New and Grade A continued to dominate take up
accounting for 69% of total floor space. With extremely limited new
development in most areas outside of the core Thames Valley Grade A
New take up as a percentage of total floor space is down 60% at
965,000 sq ft. During the past 10 years only 2009 witnessed a lower
level of take up in this Grade category.
Grade A New and Grade A accommodation continues to attract the
larger occupiers with smaller occupiers who generally look for
greater lease flexibility and lower rents typically gravitating
towards Grade B where this is more readily achievable. The average
Grade A New letting totalled 22,387 sq ft whilst Grade B totalled
only 13,170 sq ft.