This is the latest research from Rare – showing pipeline development in the Thames Valley over the next three years. This includes just new developments, substantial refurbishments and schemes with planning. We are aware of several other developments which prior to Covid 19 were planned but their future is now less certain and so have not been included at this point.
What is clear, is that development in the Thames Valley is at its lowest for over 15 years and with demand statistics demonstrating that occupiers favour Grade A space, there is inevitably going to be a shortage of space in the region. This may well be exacerbated if we see the anticipated increase in demand as central London occupiers look at decanting from London to the region. Any short term increase in incentives offered to occupiers or decline in rents due to suppressed demand this year is likely to be recovered quickly in Q1 2021 and we anticipate strong rental growth in 2021.
Certain towns, including Basingstoke and Slough are notable for their lack of new, town centre stock coming on stream over the next three years and with their strong locational links and multi-modal connections are likely to be centres which both recover quickly and witness strong rental growth over this period.
It is clear that many have abandoned concerns about the future of the out of town business park market and despite historic worries over the environmental consequences of perpetuating the use of the car, greater concerns about the safety of travelling on public transport in a post pandemic era appear to outweigh such issues which it is expected, will be offset by the growth in the use of electric cars.
The majority of schemes total less than 100,000 sqft and many are likely to be offered on a floor by floor basis from the outset. It is also likely we will see an increasing number of developers incorporating co-working space and greater levels of amenity with speculative schemes thereby creating a greater sense of community and wellbeing within each scheme.
To what extent we see building design evolve due to address concerns over touching surfaces remains to be seen but it is expected that specifications will be scrutinised carefully by those whose schemes are not already on site with appropriate changes made. Although few in number in this region, multi-storey schemes of more than 10 storey are few and far between, it will be fascinating to see whether occupiers continue to be willing to pay premium rents for the upper floors where reliance on lifts is essential or whether lower floors, readily accessible by using stairs will be favoured and so will attract rental premiums.
The debate around the future of office demand in the face of growing recognition that technology now permits the majority of employees to work effectively from home has received many column inches in the press over recent months. It is clear that the technology now exists and is sufficiently robust and resilient to facilitate this. What is less clear is the resilience of the human mind to working in isolation and the needs of people to regularly interact with others in order to satisfy that most basic of human instincts, social contact. We anticipate the office of the future will continue, with increasing velocity down the path of moving closer to the hotel model, where occupancy will be determined by a core need to accommodate many of the traditional support functions (HR, accounts, legal etc) added to which a more flexible element will “flex” its need for less or more space as the business of the occupier responds to the changes imposed upon it by world events. This will prompt the need for as much innovation in the funding of office development as in its design.
Our Pipeline Development Map is now available for download here.