Continuing low availability and strong demand in Croydon, have lifted rents to new highs, according to agents SHW.
SHW reports showed that vacant offices totalled 206,000 sq ft by the end of June this year, just 3.7% of built stock. This contrasts with the 1.8m sq ft of offices available in Croydon in 2013.
The agent said that strong demand combined with dwindling supply, means the relatively few spec builds are faring well, with many pre-let ahead of completion.
SHW said demand has led to a reduction in tenant incentives and prompted investors to refurbish older stock, which it expects to be snapped up at practical completion.
Headline rents of £34 per sq ft have been achieved at M&G’s Renaissance office block and rents of £34.50 per sq ft are being quoted for refurbished space at Interchange.
In the industrial sector, prime locations are seeing very low stock levels that are holding back take-up figures. In Croydon 3.5% stock is available. The average size of unit available in the Croydon area, at 14,000 sq ft, highlights the lack of larger buildings, the agent said.
Demand is being driven primarily by logistics occupiers with very few manufacturing or light industrial requirements. Rents have continued to increase in all locations, especially in good distribution hubs, and record yields of 3-4% are being achieved for prime stock.
Tim Hardwicke, head of business space at SHW, said: “Croydon’s office markets continue to entice occupiers from central London with an attractive package of fast rail links, a good labour pool and relatively cheap occupational costs. The challenge in the short to medium term will be to satisfy tenant demand with a sufficient range of quality accommodation at affordable rents.”
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