The Business Exchange Swindon & Wiltshire Edition 28: Dec/Jan 2016/17 | Page 30

COMMERCIAL PROPERTY

SWINDON OFFICE MARKET REVIEW 2016
Loveday's Bradley Forbes gives us an insight into the commercial
property market in 2016 and his outlook for 2017.
The occupational office market in
Swindon has been rather sluggish this
year. Given that 2015 was the most
active since accurate records began,
2016 has proved to be in stark contrast.
Our prediction in our Spring Office
Market Report was for the traditional
slow start (compounded in our view by
the forthcoming EU Referendum) to give
way to improved market activity from
the summer onwards. This resurgence
has failed to materialise
To highlight this contrast, by end Q3
in 2015 the town had seen 226,000
sq ft of office take up, whereas to end
Q3 2016 this figure amounts to just
83,000 sq ft, a reduction in take up of
over 60%. The SME sector continues to
tick along, but lacks the vibrancy that
is typically generated by smaller firms
which are the lifeblood of the local
market. Enquiry levels are down and
speed of transactions has slowed in this
sector, which is arguably more sensitive
to the general nervousness we are
experiencing in the UK since the country
voted to leave the EU.

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THE BUSINESS EXCHANGE 2016

The corporate sector appears
more active, with numerous large
requirements circulating and a
substantial letting having taken place
this year to Vets 4 Pets at Churchward
Park; a new occupier to the town. This
is to be celebrated and underscores
Swindon’s draw as an attractive
location for office occupiers, despite
its traditional manufacturing and
distribution base.
Even though we have experienced a
reduction in activity in the occupational
market we still maintain a positive
outlook for the medium to long term.
Looking back, the office market was
particularly badly affected during the
years 2009 – 2011, with the town
suffering from an acute oversupply
of office space. This had the effect
of reducing rents dramatically, in
some cases to levels more akin to
industrial rents, even for good quality
office buildings. Due to a number of
interplaying factors; the Government’s
empty business rates policy, lack of
development and improved economic

fortunes, this is no longer the case.
Office availability in the town has
reduced to around half the total at the
peak of the recession and now stands at
just below 600,000 sq ft.
This now means that there is a lack of
good quality stock available to occupiers
and is manifesting itself in a steady and
sustainable increase in rents despite a
slowdown in activity. A clear example
of this is in the recent letting of Links
House at Westmead. Terms were agreed
in the summer, during the construction
phase of this brand new 6,000 sq ft
building, at a record rent for this location
of £18.50 per sq ft pax. The fact remains
that there is still a demand for good
quality space from occupiers due to a
lack of choice.
Given that there are no plans for more
speculative construction of offices within
Swindon we are likely to see rental levels
continue to increase and strangely, in a
period of relative quiet for the sector, the
balance appears as though it will remain
tipped in the favour of Landlords for the
foreseeable future.

Bradley Forbes, Loveday