Whilst 2023 was a year during which the commercial property market has endured in certain sectors and excelled in others, improvement has been seen already across the board in 2024. Top performers number neighbourhood retail alongside the logistics sector and community uses. These successes are aligned to the on-line market, “working from home” and a general desire for social connectivity. These trends conspired against the office sector, which has developed a micro trend of “flight to quality“. To elevate business performance, many offices are being upgraded to assist with the direction of travel for the return to the office – moving towards “working from the office” again. Notably Christopher Thomas placed circa 30,000 sq.ft of offices under offer in January ranging from small 2 person suites through to large corporate office floors and buildings throughout the region.
Selected coverage of these market indicators is outlined below.
At the beginning of the year prime retail began to perform better than pre-pandemic. In Windsor town centre as an example, we let two shops in Peascod Street, one at circa £150 per sq.ft. itzA headline anchoring a rebound from the deep pandemic levels of £80 per sq.ft. itzA. Amarino moved into 9 Peascod Street and Lazy Sundae into 112 Peascod Street. The new Use Class E introduced with no Government consultation in 2020 threw open the doors to food and beverage under permitted use. This generated an avalanche of coffee shop and restaurant openings This may not be good for retail in the long run, although has filled up prime pitch retail in the short term. We have recently advised clients who own The Hermitage Ascot High Street, once more with terms exceeding pre pandemic rental levels, again food related. Lesser pitch but still prime town centre stock has also achieved good results. As a few examples, Market Cross House Windsor let to The Shambles (wine bar) and 9 High Street to Lawson Estate agents.
Market Cross House Windsor Let to The Shambles Wine Bar
Regional neighbourhood parades have excelled with client portfolios fully let through the year – Oakmede Binfield as one example and in West Windsor which has 100% retail occupancy, we have been busy negotiating and settling various rent reviews and lease renewals. Dotted around The Great Park villages we’ve demonstrated continued success in Datchet increasing one retail unit’s rent by 60%, in Sunninghill with good activity and we’ve run out of stock in Sunningdale – similarly nothing left in Old Windsor, Ascot or Virginia Water.
Warehouse Industrial and Logistics
The push to on-line purchasing and logistics generated a self-fulfilling prophecy with the drive to on-line purchasing and logistics impacting the warehouse /industrial market, which struggles to cope with supply. Consequently as expected rental values have moved on. Christopher Thomas were among the first to forecast this trend. In Windsor in the past few months we’ve let circa 10,000 sq.ft. in two units at Windsor Trade Centre, each in the mid £teens per sq.ft. mark. Similarly at The Boyn Valley Estate Maidenhead recent lease renewals have shown up to a 160% uplift in headline rents. For M4 and M3 corporate tenant clients we’ve been struggling to maintain reasonably affordable increases with some areas approaching the £20 per sq.ft. mark. We’re lease renewing 3,800 sq.ft. and 12,000 sq.ft in Sunbury at just below this level. In the past few weeks we’ve brought the well presented Unit B Crabtree Road Thorpe Egham to the market 3,963 sq.ft. at £17.50 per sq.ft. Stock remains in limited supply, this is likely to continue through 2024. Some out of town office schemes are being demolished and transitioned into the logistics warehousing market – such is the market inversion.
Unit 1 Windsor Trade Centre let to Blackthorne IT
This is a mixed bag of a market where landlords with excellently presented space (Grade A plus) are ahead of the pack. Notably at this level of presentation headline rents are being maintained – two offices in Windsor town centre have recently been let by us in the mid to late £30’s per sq.ft. range, both desirably finished, aligning with the adage – “it has to be worth the commute”. Whilst the journey of travel is back towards office working, in order to encourage this, the office standard needs to exceed expectations to dismiss the line of, “I can do all of this at home anyway”. We’ll shortly be launching a campaign which includes the line Motivate : Collaborate : Elevate – looking to greater productivity and a 2004 ongoing return to workplace office use.
Successful schemes this year have included Parkside Windsor, Saxon House Windsor, Admiral House Windsor, Riverside House Windsor, The Old Soap Factory West Drayton, Europa House Gerrards Cross, Magna House Staines, Friendship House Staines. In January we’ve negotiated over 30,000 sq.ft of lettings, so are looking to ongoing positive activity as the office sector continues to emerge. A selection of great regional office stock can be seen on our web site.
Saxon House Windsor part let to L- Founders with additional available space undergoing a landlord Grade A plus fit out
Property Investment and Freehold sales
Our primary transactional involvement has been in the neighbourhood and town centre retail mixed residential sector, the better grade office sector and as advisers in the industrial sector. Retail has performed reasonably well, sales in Sunninghill, Shepperton and Staines have shown yields between 6.25 %and 7.22% gross with more sales in progress leaping into 2024. Good quality office stock is selling to the owner occupier market – for example we have sold Barons Court Egham 5,500 sq.ft. at just over £320 per sq.ft. Building cost inflation has worked against the office to residential conversion market which in the short to medium term will result in more good grade office stock being retained in office use. On the industrial front Table Properties acquisition of Boyn Valley Industrial Estate Maidenhead changed route from the previous owner’s pursuit of large scale residential development. Having retained the estate in current use, and refurbished, we are achieving the forecast mid £teens rents. See more at www.boynvalleyestate.co.uk
Barons Court Egham freehold sold to Kingston Landscapes at £320 per sq.ft.
Demand under the general banner of community use has seen us acting for clients on a broad range of property, from nursey schools to gyms and dentists. The sector has expanded its presence throughout the region. Some have taken warehouse premises and converted, others occupying long standing hall type premises and further still – particularly dentistry and physiotherapy – in town and out of town parades. One noticeable pandemic manifestation is the increased demand for veterinary practice premises. Where rent reviews and lease renewals have been negotiated uplifts have been achieved between 10% and 50% depending on the size type of building, parking and more specifically, the lease terms.
Unit B1 Fairacres Windsor let to East Berkshire NHS physio services
2024 is set to be a busy and engaging year, for all sorts of reasons, a dynamic changing market.
Many thanks to our clients and customers, friends and colleagues for support in the year ahead.
Christopher Thomas AssocRICS and RICS Expert Witness Surveyor
Feature Photograph – Royal Holloway London University Egham