Demand for office space in Croydon remains high with 2015 set to be the best year for lets in the town centre since the 2008 crash.
That was the message from Vanessa Clark, who gave an overview of the office market at the 2015 Develop Croydon Conference, although she warned that the town centre no longer has vast swathes of available space.
She also said rental values will need to increase for much-needed office developments in Croydon to be economically viable.
“Availability has dropped from 1.8m sq ft two years ago and the amount currently available for occupation is just over 300,000 sq ft,” she said.
State of the market: Vanessa Clark of Sinclair Clark
“That’s quite a shocking statistic and if you an occupier wanting more than 30,000 sq ft it is slim pickings until new delivery happens in between 12 and 24 months time.
“Part of the reason for this is permitted development and in the last two years 25 buildings have been sold with the potential for residential conversion so a lot of the buildings people thing might be there for occupation simply aren’t.”
Ruskin Square, being delivered by Stanhope and Schroder, will produce in excess of 1m sq ft, while refurbishment of 8 Bedford Park by M&G and 96 George Street by Freshwater will also add to the supply.
This is in addition to Abstract’s Renaissance, which let out 100,000 to the Pension Protection Fund, Mott MacDonald and Parabis Law shortly after being delivered, and Interchange, where Superdrug are rumoured to be joining TPS Consult, Carillon, IT Global and EDF Energy as tenants, leaving just over 50,000 sq ft of available of space after the transformed building initially struggled for occupiers after being transformed by Canmoor and CarVal.
Setting the tone: The new Interchange offices
Vanessa added: “Renaissance achieved £23.50 per sq ft while Interchange is now at about £25 per sq ft. which sets the rental tone for Croydon at the moment.
“To deliver a new development, £25 per sq ft is insufficient and viability will be called into question.
“However, office take-up and demand is going reasonably well. We were at aout 150,000 sq ft last year, with a few deals in hand we already have about 160,000 sq ft this year but that could increase to over 200,000 sq ft which would make this the best year since the absolute fall in the market.”
However Vanessa warned that the pipeline was “relatively thin” compared to where it once was.
Delivering: Ruskin Square is a vital scheme for Croydon
“Ruskin Square is a significant part of that and the fact that is under construction at the moment, delivering the first building, is fantastic,” she said.
“Guildhouse Rosepride are really focusing on the office element of their One Lansdowne Road scheme, in the knowledge that there are some very good requirements out there. They are now looking at delivering 30,000 sq ft floor plates, alongside their 65-storey tower.”
And she pointed to Ruskin Square and the Croydon Partnership’s redevelopment of the shopping mall as the game-changers for Croydon’s office market.
“Ruskin Square is a significant scheme because for years the prospect coming into East Croydon has dogged Croydon,” she said.
Game-changers: Vanessa Clark
“Because so many people pass through East Croydon as well as alight at it and there first image has been of a complete warzone outside the tracks. That has been a very difficult image to shake off until now when you are confronted with 10 or 11 cranes, while East Croydon has suffered so badly from a lack of restaurants and cafes and Boxpark, part of the Ruskin Square delivery, will provide much-needed amenities, particularly while construction takes place in the town centre.
“Obviously the biggest gamechanger of all is Westfield. I think there are some stats released the other week that shows that people aren’t looking at necessarily access or transport; they want to be near a Westfield.
“And if you’ve been to Westfield London at Shepherds Bush and Stratford you can see why. It has an amazing effect on regeneration in its areas. Shepherds Bush and Stratford are completely different places.”