Thames Valley suffers worst year since dot.com crash
Propertyweek.com has reported that 2009 was the worst year for lettings in the Thames Valley since the dot.com crash. Figures provided by Cushman and Wakefield show that take-up of office space in 2009 fell by more than half the 2008 figure to 891,000 sq ft, the lowest take-up since 2001.
However, there is hope for 2010 as it expected the market to stabilise with vacancy levels falling by the end of the year. Cushman & Wakefield said that, although development had fallen by 83.5% since last year, many tenants also decided to sublet excess space which meant that the supply of offices available to rent still increased by 29%. The supply of grade-A space is around 60% of the levels in the post dot.com downturn in 2003.
Cushman and Wakefield said that prime headline rents fell by 11.6% last year to an average of £23.90/sq ft a year, the lowest since 2004, and tenant incentives packages mean that net effective rental levels are some 30-40% below this, creating “historically low rents”.
Charles Dady, head of UK office agency at Cushman & Wakefield, said: “2009 was not a vintage year but headline rents and incentives are now stabilising and, when we look back in 12 months’ time, the first quarter of this new decade may well be regarded as the turning point in the cycle.
“The recovery will be gradual but areas where supply is most constrained, the main CBDs for example, will see a quicker turnaround in fortunes as occupier confidence returns.”