Take up across the South East office market (defined as the Western Corridor and the north and south M25 markets) for the second quarter of 2014 reached 413,436 sq ft, according to Strutt & Parker.

This represents a 37% fall from the previous quarter and a 48% drop from the corresponding quarter of 2013. The main culprit for the poor quarter was the In-Town market, where take-up fell sharply to 160,782 sq ft from 475,198 sq ft the previous quarter. Out-of-Town take up actually increased in the quarter, rising to 252,654 sq ft from 184,067 in Q1. 

Ed Smith, head of national markets office agency at Strutt & Parker, said: “In 2013 the South East performed better than it had done since 2007 and we are still experiencing one of the after-effects of that success.  Many of the larger requirements have now been satisfied, which has taken-up large chunks of the speculatively built stock delivered in the key South East towns, and this is having an impact on availability and the choices open to occupiers.  There are a number of new schemes on site and we should see deals being done in this space towards the end of the year.”

“Despite the falls in take up, sentiment in the South East market remains positive and, where deals are being done, they are achieving headline rents and incentives are moving in to pre-recession levels.”

Strutt & Parker’s research indicates that demand for South East offices continues and has identified 665,000 sq ft of space as being under offer and a further 4.1m sq ft of active demand. Space under offer is up 39% on Q1, suggesting a strong bounce back in Q3.

Ed Smith continued: “Q2 2014 has seen the South East market ‘catching its breath’ after the huge amounts of space that were transacted in the preceding 12 months.  There are some exciting new developments underway and the rents achieved on new stock will instil confidence in developers to meet the demand for Grade A office space in the key South East towns.”