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 year average.
• 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.

Read the full National Offices & Business Park Survey Winter 2011/2012