Office Market: update

Kirkby Diamond looks set to celebrate its best year ever for office lettings and sales in Milton Keynes - as well as building a strong presence in St Albans having recently opened its first Hertfordshire office.

According to Matt Bowen, partner and head of commercial agency, there seems to be a two-tier market developing where the very ‘best in class’ are still receiving interest and transacting. Evidence then suggests that companies are seeking good value offices which, whilst perhaps not being to the very highest specifications, are excellent functional spaces at a significantly discounted rent or price.

Where employees are not in five days a week, it seems they are more willing to accept their employers having offices further away from where they live. With a challenging economic climate, this allows companies to seek cost-effective property solutions.

A hive of activity in Luton and Milton Keynes:

This is evidenced with the increased take up in business parks like Capability Green in Luton where we have recently completed several lettings from 2,000 – 7,000 sq ft, plus a 5,000 sq ft building sale. Our acquisitions on the site include Churchill Services and Hallgarten Wines. Capability Green has enjoyed a huge revival in popularity in the last 12 months, with easyJet taking over 50,000 sq ft and two further international operators considering the site. It is refreshing to see the business park now welcoming many new high-quality occupiers.

In St Albans and Herts generally, out-of-town locations such as Spring Valley/Porters Wood are fully occupied for the first time in memory and we have just completed a 3,475 sq ft letting in Trident House, in the city centre - a perfect example of Grade A office space available at £10 psf less than the very ‘best in class’ buildings.

Milton Keynes, known for its high-quality office space with excellent accessibility, is bucking the trend with relatively strong transaction numbers across all ranges of quality and rent. Whilst larger spaces can take longer to transact, we have a lot under offer and due to complete before the end of 2024, making it our best year ever for offices in Milton Keynes. With quality stock being instructed on, 2025 is looking positive and our position of number one agent in Buckinghamshire for office transactions looks set to continue.

Downsizing, or upsizing?

Most office moves continue to be occupiers downsizing. However, we are beginning to hear from companies where their ‘hot desking areas’ are difficult to manage on days with more people than desks. If we see a reversal of the home working trend, then companies will soon need to increase office space.

With the increase in supply and options for occupiers, we are seeing a general trend for shorter lease terms or break clauses, as companies aren’t certain about their long-term occupational needs. They are also keen for landlords to incur the cost of a fit-out, rather than having rent-free periods. This is likely to continue until demand begins to outstrip supply.

Some difficulty remains...

The southeast market remains quiet, with take-up at historically low levels. St Albans is a difficult market, with probably the lowest level of transactions recorded in 2024 and availability of over 270,000 sq ft. Where landlords can do rent deals, they are likely to see take up before those where rental levels must remain high, even if vacant, to protect asset value.

Is the office market looking up?

Larger firms such as Google now require employees to be in the office five days a week. If this filters down, more companies will find their current space isn’t large enough and will have to find more suitable accommodation. This could see 2025 being a much stronger year for offices across the region.

matt.bowen@kirkbydiamond.co.uk

Head of Commercial Agency

07442 820 386