From The Local...

Development in the South East and Thames Valley

Mike Rayner, Head of Development, Oxford Properties describes the signs that confidence is returning to the industry South EastMikeRayner2

Blackstone's rumoured selling of Chiswick Park at a profit in excess of £200m makes a significant statement - not merely that they've managed to pull off another impressive deal, but that the confidence that has come back to the London property market is decisively filtering through to the regions. The South East, and Thames Valley in particular, has tended to benefit from investors seeking opportunities with lower yields close (enough) to London to prove 'safe.' But that knock on effect only works when the London market is buoyant. And in terms of new development, the Thames Valley market has been constrained over the past five to ten years due to the high supply created through the tech boom in the early 2000's. However, as the wider market has improved, a good proportion of vacant buildings have now been let up. This indicates that the time is right for development to begin, and there are plenty of schemes that are now looking to get on site in the next 6 - 12 months.

The Thames Valley is an environment where the Local Authorities are keen to promote economic growth, and where there is a good availability of potential development sites and relatively low supply of Grade A stck. Our own investment at Green Park in addressing the issue of quality supply is paying dividends - the refurbishment of 100 Longwater Avenue for example has seen occupancy within that multi let building increase from 50-94%. GreenPark2This kind of evidence of occupier demand has and will impact on the development market in the region - the existing rent profile and relatively low site price means occupiers can look to development as well as existing stock - and we investor developers can justify building it. We only need look again at Chiswick Park; the terms of the letting to Aker for example are evidence of the increasing strength of the market and the fact sensible rents can be achieved - thereby giving encouragement to us that quality development stock can be justified. It might be a while before widespread spec development returns to the region, or at least we'll wait and see how M&G get on with their spec project, but certainly the signs suggest we should be seeing shiny new bricks and mortar alongside big new lettings in the Thames Valley in the not too distant future.



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