According to Savills, take-up in the Watford office market hit 104,678 sq ft (9,733 sq m) in May of 2016, a 40% increase on last year’s total take-up of 74,683 sq ft (6,938 sq m), driven by continued corporate commitment to the town.
Savills predicts that take-up is set to increase further still when the construction of Threadneedle’s 60,000 sq ft (5,574 sq m) office building at Croxley Green Business Park completes in Q4 2017, the first speculative development seen in Watford since 2006. A further 39,990 sq ft (3,715 sq m) of recently refurbished Grade A stock available at 45 Clarendon Road and The Junction should also help meet strong occupier demand.
The continued demand for office space has been underlined by a number of recent corporate deals. This includes TK Maxx purchasing a site on Clarendon Road in 2015 with the view to develop 100,000 sq ft (9,290 sq m) of office accommodation and Smith & Nephew taking 60,000 sq ft (5,574 sq m) at Croxley Green Business Park in 2016, the largest letting in Watford for 15 years.
Despite this, Watford has remained largely undervalued compared to other surrounding M25 towns. Rents for refurbished Grade A space currently stand at circa £27 per sq ft (£290 per sq m), whereas Uxbridge and St Albans stand at £34 per sq ft (£366 per sq m) and £30 per sq ft (£323 per sq m) respectively. For this reason, a major attraction is Watford’s affordability in contrast to the other core South East office markets.
Savills anticipates that rents are likely to increase over the next 12 months. There is already evidence of this, as shown by Veale Wasborough Vizards. The law firm recently took 11,000 sq ft (1,021 sq m) at 45 Clarendon Road, paying £27 per sq ft (£290 per sq m), the highest rent achieved in the town since 2001. Let prior to practical completion of the refurbishment, this underlines the demand for Grade A office space as the lack of any new development continues to drive rent upwards.
Andrew Willcock, director in the South East office agency team, comments: “In the past Watford has been unable to capitalise on the significant demand for office space in the northern sector of the South East office market largely due to the lack of new development. However, the commitment from Threadneedle to spec build at Croxley Green Business Park highlights the current developer confidence in the town. Boasting excellent transport links and a vast corporate occupier roll call, it remains an obvious choice for a number of businesses. This recent rental uptick should help to encourage further activity both in the centre and in Watford’s business parks.”
