Thames Valley Improving

Recent reports confirm that take up of office space in the Thames Valley has increased over the last 12 months. Enquiry levels are up and agents acting in the Thames Valley market are optimistic for the year ahead.

With the expectation that headline rents will soon be sustaining £30 per sq ft plus in the prime locations, investors are turning a closer eye to the Thames Valley market. The shortening yields in Central London are making the institutional and private investors look more closely at the more attractive returns available within the prime Thames Valley towns. David Mundy, Investment Partner at Mellersh & Harding commented that “there has been a spate of M4/Thames Valley purchases of properties at double figure initial yields where the location is good and the tenant is strong, however the risk is the short term income and the high passing rents. However, if prime rents are beginning to improve and investor demand is on the up then these purchases could well prove to have been astute buys.”

High yielding deals include the disposal by IVG of the Alpha and Beta buildings in Reading Town Centre let to the Prudential. Scottish Widows paid just under £22 million for the buildings representing a net initial yield of 12%. The investment was let for 3 more years and the price equated to approximately £240 per sq ft. On Maidenhead Office Park, AXA have disposed of Eton House, a 67,000 sq ft building let to Avaya for a further 7 years. The tenant is not in occupation and the building was over-rented. The price paid of £16 million reflected an initial yield of 10.5%. Back