COVID-19 continues to impact the Thames Valley office market, but not as you might expect with Bracknell experiencing long-awaited office revival.
Bracknell suffered more than most UK towns and cities in the aftermath of the Dot Com Crash in 2001, with little time to recover before the 2008 financial crisis struck.
It became a town dominated by the burgeoning technology sector which grew rapidly at the start of the 2000s, fuelled by a desire for both people and businesses to become Y2K compliant.
But as the financial crisis hit, what was once its strength, became its Achilles heel. The result was an historic oversupply of office space in the town, which put downwards pressure on rental values and led much of the town’s office supply to be converted into residential housing.
For many years, commercial property rents failed to recover from the pre-recession highs of £32.50 per sq ft and have not reached that level since. The town became overlooked as a place for businesses to locate in favour of neighbouring towns like Reading.
However, according to Guy Parkes, a partner at property consultancy Vail Williams LLP, Bracknell is experiencing a tentative revival as office demand peaks amid the COVID-19 pandemic.
What was once its Achilles heel is now its strength, as the IT sector booms amid the pandemic, fuelling demand in tech clusters and towns like Bracknell.
Parkes, who is based at Vail Williams’ Thames Valley office, explains: “Even before COVID-19, Bracknell was witnessing a resurgence in the office market as its reputation as the UK’s Silicon Valley grew. The historic reduction in office supply had resulted in some 140,000 sq ft of new active office requirements, yet rents remained competitive and compelling compared with other locations nearby.
“This, together with significant regeneration in the town, has made Bracknell a compelling destination for the business community and this has not diminished despite the impact of COVID19. Quite the contrary – we are seeing office demand continue to rise here.”
Over the last 20 years, Arlington Square has been the prime office location in Bracknell, underpinned by the recent regeneration around it, including 580,000 sq ft of new retail, cafes, restaurants and leisure amenities at Lexicon Shopping Centre.
This helped to attract global brands including 3M, Dell, Fujitsu and Panasonic who recently took 41,846 sq ft of office space at the Maxis scheme, in a deal brokered by Reading-based Vail Williams.
At the height of lockdown global pharmaceutical company Eli Lilly also took 43,186 sq ft in Bracknell at 8 Arlington Square West, meanwhile existing occupiers, Honeywell Control Systems Limited, have recently recommitted to 72,604 sq ft at Arlington Square.
“The fact that significant deals are continuing to happen in Bracknell during the pandemic, is a sign of rising confidence there, driven largely by its unrivalled strategic position on the M4, skilled labour force and housing stock.”
However, as Bracknell gains in popularity, headline rents are beginning to creep upwards and are now approaching the historic highs of the naughties at almost £30.00 psf.
Despite this, Vail Williams believes it remains an affordable and attractive location for businesses compared with its more expensive neighbouring towns, with headline rents varying between £22.50 psf in the Western Business District, to £30.00 psf at 8 Arlington Square West.
Guy continued: “Rents in Bracknell are close to £10.00 psf less than in places like Reading, Slough and Maidenhead, and up to a staggering £12,000 less per head than in Central London, where many businesses are now looking to decentralise out to the regions in order to access a wider talent pool and to achieve more value for money.”
“As businesses look to (safely) re-energise remote teams with quality drop-in office hubs, this represents a real opportunity for towns like Bracknell. However, supply of smaller self-contained flexible office space needs to meet demand and availability of Grade A space remains an issue, with just 12 months’ supply in the pipeline.”
Vail Williams, which is based at Thames Valley Park, is seeing a spike in office enquiries from SMEs seeking smaller spaces over self-contained floors or self-contained building with their own entrances, reinforcing the attractiveness of more flexible office units with equally flexible lease terms.
However, 7 Arlington Square West – a 66,600 sq ft Grade A headquarter office building, is the only the speculative office scheme in the town currently alongside 3 Arlington Square which is offering self-contained fitted suites, marketed by Vail Williams.
“Bracknell has proven itself a premier regional business location and is experiencing a long-awaited revival but with close to two million square feet of lease events in the town over the next 4 years, we need to ensure the town is well placed to take advantage of demand, by delivering more Grade A office supply to continue to fuel the town’s office revival.”
With over 40% of commercial property occupancy in Bracknell driven by the technology, communications and pharmaceuticals sectors, all of which are predicted to emerge from the current economic climate better than most, Bracknell has significant investments potential.
“We know the themes and sectors that are driving demand, so unlike the recession of 2001 or 2008, we expect the town to emerge from the COVID-19 recession in a comparatively stronger position as businesses on the growth trail seek a new style of office community here,” concluded Guy.