Wilkins Green

Despite signs of a tentative improvement in the financial markets, the SE M25 office market remains subdued with levels of activity stifled on the one hand by a limited demand but also by a shortage of good quality accommodation coming to the market.

Vacancy rates in the main office centres of Bromley, Sevenoaks and Maidstone  stand  below 5% with no new stock coming to the market.  There is availability of Grade B second hand space with over 100,000 sqft in Bromley, 150,000 sqft Maidstone  and 40,000 sqft in Sevenoaks - according to recent research produced by Knight Frank.  This may sound enough when take up is at an historically low level and the strongest demand is at the smaller end of the market but occupiers do actually have limited choice when exact location, specification, size and space configuration  considerations  are all taken into account.  Within the Kent sector of the M25 it is only Crossways Dartford that is offering new grade A space.  Crossways Point comprises two new offices of 16,700 sqft and 24,600 sqft.  Practical completion took place this summer and 12,200 sqft has been let so far.  The in going tenant is Balfour Beatty showing the construction sector may have some life in it yet.

John Wilkins advised Kier in respect of their acquisition of Royal Court, Bromley which Kier took occupation of in May after a comprehensive refurbishment to bring the building up to a modern corporate occupier standard.  Royal Court is approx 23,000 sqft  and was selected by Kier because of its prominent position,  convenient access and proximity to Bromley South Station and although the building is nearly 20 years old it was capable of a high quality refurbishment which Kier were able to project manage themselves.

Although there is downward pressure on office rents across the SE sector, rents are proving more resilient than the Thames Valley where quoting terms have been reduced spectacularly to generate interest.  The headline rent paid by Balfour Beatty has been rumoured to be £23.50 psf which shows no decline from lettings in West Kent pre Lehman Bros.

Investor interest in the sector appears to be returning.  In Croydon, where vacancy rates have edged over 6%, Metro Point, the 40,500 sqft building completed in 2002 and let to Dept of Transport has been purchased by overseas investors for £12m, representing a yield of 7.25%.