Rents for prime office space in key towns in the southern M25 area are likely to rise as a result of a lack of good-quality stock, says Hurst Warne. Will Gelder, in the firm’s Redhill office, says the economic downturn in 2007 put a stop to almost all new commercial property construction in the area and points out that, with developers struggling to secure new financing during the recession, there is a lack of developments coming through in the pipeline.
Headline rents in nearly all southern M25 towns have fallen since 2007, he adds, after approaching £30 per sq ft before the recession in key towns. There has been gradual take-up of the better-quality available office space as Grade A offices have become more affordable, which means that the supply of Grade A offices in Redhill, Reigate offices and Leatherhead offices is dwindling.
A rise in rents for better quality space in these towns is thus “almost inevitable” in the next 12 to 24 months, the firm says. Hurst Warne notes that two recent deals – at The Heights Business Park in Brooklands and Kia Motors at Walton Green (both £28.50 sq ft) – confirm that “demand for prime space is already pushing rents up”.