Lack of M25 office stock is expected to lead to a 15% rental increase over the next 12 months
Simon Morris today picks up on figures announced recently that there’s expected to be a 15% headline rent rise in M25 office stock over the next twelve months, this goes hand in hand with an increasing demand for new stock in this growing area.
A spokesperson for a specialist in the area said: “Rental levels in the M25 market have headroom in prime towns with low supply. Areas that will achieve the best growth are the west London boroughs, Reading, Uxbridge, Heathrow, with a rippling effect, moving to areas outwards of these, by Q1 2015.”
“The rise is partly owing to supply levels becoming increasingly under pressure. There are a growing number of key markets that have less than three years of office supply left.”
Prime yields now stand at 5.25%, this is 75 basis points ahead of 2013.
A six year high
Market activity in the M25 is at a six year high in Q1 of 2014. Vacancies in the available space have fallen to 5%, this is a remarkable ten year low. The growth in demand is expected to stimulate a growth of new development activity as well as a number of assets being refurbished.
Domestic and overseas investors are creating a hive of activity in the M25 office market. Demand is competitive and investment volumes in 2013 reached almost £3bn, the second highest year yet recorded. This is despite the fact that the market is currently restrained by a lack of available stock.
Insight from Simon Morris
Simon Morris has a wealth of experience in property investment, both in terms of Residential and Commercial properties. He believes these figures show that the UK Commercial property market as a whole is an increasingly profitable sector for the intelligent investor.
The influx of overseas investors into the South East market, coupled with forecasts for increased growth in rental yield and demand for new stock confirms what we’re seeing in other areas of the UK.
Having a piece of the valuable Commercial property market is once again becoming a vital part of any investment portfolio. Especially for those looking to ensure a stable return.