A comment piece from Vanessa Clark, managing partner, Chase Sinclair Clark and a board member of Develop Croydon…

The beginning of 2024 started with strong activity as all vacant office space, plus a lease renewal was delivered in Renaissance when Mott MacDonald, in a measured move out of their former HQ, committed to the persuasions of being in one building with large floor plates. A coup for Landlords RLAM and also for the Engineering sector.

As the year races to the end, at the start of this quarter another major letting has been delivered, this time in the Education sector by Fairfield School of Business (FSB) who have signed for a total of circa 24,000 sq ft on lower ground, ground, first and second floors in Freshwater Group’s Simpson House on Cherry Orchard Road.

FSB are proof of the growing demand within the educational sector for space and the need to identify buildings capable of being re-purposed. The transactions provide the College with space adjacent to existing facilities for growth to accommodate their new linkages to Universities including Bath Spa, Birmingham and Ravensbourne College of Communication.

FSB has committed is to long leases of 15 years and market rents and improvements to the offices and common parts. Secured Cycle storage is being added as part of the proposals.

Alongside the transactions above, there continues a slow but steady flow of take-up by way of both lease renewals and new lettings which means the statistics for 2024 will be higher than in the previous 4-5 years and it will easily exceed 100,000 sq ft.

In another trend gathering momentum in the office market there has been a surge of office buildings coming to the market for sale. Much of this has been driven by a number of buildings with lease expires leaving fund managers to contemplate options as buildings are left vacant. In other instances, mergers have led to a need to rethink the inherited real estate and trim it and improve it at the same time, having regard to the WFH pressures which are not decreasing anytime soon.

In all it is anticipated close to 1.5 m sq ft will be removed from class E provision and sold by fund managers between now and 2026. The timing coincides with the new refreshed central government Permitted Development initiative. Amongst other impacts this will support rental growth and the need for more Grade A new stock.