Over the last year the office market has continued its steady improvement with an increase in the number of enquiries supporting the provision of further new office accommodation. There is evidence of some positive rental growth in parts of the county although this has been fairly minimal. Over recent months there have been signs of a general slow down in the level of activity, especially for larger secondary office premises.
West Kent continues to be the favoured location, although there is a notable lack of supply of modern open plan office accommodation available on the market, which has resulted in a reduction in the number of lettings and a ceiling on rental levels achieved. Overall, small office suites let well and attract good levels of interest. Other parts of the county are also experiencing a good level of demand although activity within East Kent continues at a steady pace.
Speculative development continues in various parts of the county. At Eclipse Park in Maidstone, phase II, comprising four buildings totalling 8,175m² (88,000ft²) is underway. Towergate, the insurance provider, is to occupy building 1 which provides 2,972.8m² (32,000ft²), as its new headquarters, which is being developed on a design and build basis.
Also in Maidstone, at Springfield Square, contractors have been appointed for the construction of the 13,006m² (140,000ft²) office development which is due for completion by 2010. The site comprises three buildings ranging from approximately 2,694 – 5,806m² (29,000 – 62,500ft²) receiving encouraging levels of interest to date.
In the east of the county, Trafalgar Court on Beechwood Business Park, Port Zone, Dover has witnessed the completion of phases A and B. Phase A, which extends to 232.25m² (2,500ft²) is available at a quoting rent of £150.70m² (£14ft²), whilst phase B is occupied by Mowll and Mowll Solicitors. Groundworks are underway for phases C and D which are to provide a further 500.73m² (5,390ft²) of accommodation.
In Thanet, close to the new Westwood Cross shopping centre, SEEDA has received planning permission to build circa 929m² (10,000ft²) of new offices fronting Haine Road, and is reporting interest in the scheme already.
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Work on phase 1 of the 25,547.5m² (275,000ft²) Watermark development by Highcross and Cantium Developments at Sittingbourne is also underway. Phase 1 comprises 13 units which are due to be completed early in 2008 and provide approximately 4,459m² (48,000ft²) of accommodation with units ranging from 232.25 – 650.30m² (2,500 – 7,000ft²). Rates of £180.30m² (£16.75ft²) are being quoted for rental and £2,421.96m² (£225ft²) for freehold purchases.
Freehold office premises have again proved to be in demand both for owner occupation and investment. In Tunbridge Wells, small office units attract capital values of £2,691 - £3,229m²(£250 – £300ft²). Rural business units within the surrounding villages are also proving popular, achieving similar levels. At the Speldhurst Business Park development by the Portcullis Group, five out of the 21 units have sold to date off plan.
In Chatham, Medway Council have acquired Gun Wharf, formerly occupied by Lloyds of London. The building, which dates from 1976 totalling almost 13,006m² (140,000ft²) with 247 car parking spaces, is to become its headquarters, allowing for the disposal of existing properties for development.
With regard to investments, a lack of supply has led to a further increase in values with yields as low as 5.4%, resulting from the sale of Mansion House in Tunbridge Wells which is let to Kent County Council and 5.5% from the sale of 81/82 Castle Street in Canterbury. There are however, signs that the market is cooling which may be a result of increased borrowing costs following the interest rate rises during the year to date.
Significant Sales
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Significant Lettings
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Office Rents
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Office Rental Growth
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Office Average Yields
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