Resurgent office market at the heart of the Growth Corridor

The ‘Growth Corridor’ or the ‘Oxford Cambridge Arc’ are fast becoming buzzwords and it has put Milton Keynes in the spotlight over the past 18 months. The growth story is very tangible with major infrastructure improvements and development in the pipeline. The city has experienced rapid population and economic growth, frequently topping economic benchmarks of cities in the UK. With over a third of employment in the knowledge intensive sector, Milton Keynes stands amongst some of the most burgeoning tech hubs in the UK such as Reading, London and Edinburgh. These factors are all attractive attributes that investors and occupiers desire, which has led to significant activity within the office market over the past 18 months.

Businesses want to locate in MK due to access to a highly skilled labour pool, excellent transport links and the relative affordability of office space in comparison to other major centres in the South East. Unlike other locations which can be captive to established local occupiers, MK excels in attracting inward investment from businesses looking to relocate out of London or establish new operations. In the past 12 months the lettings to Goldman Sachs, Aiimi and Viva Wallet all demonstrate this trend with further occupiers anticipated to follow suit in the coming months.

Despite wider macroeconomic circumstances the office market in Milton Keynes continues to outperform its peers and is one of the most active markets in the South East. We estimate that at this moment in time there is approximately 450,000 sq ft of live requirements from occupiers, which is enough office space to house up to 5,000 employees. Office occupiers leased 265,000 sq ft of space in 2018 equalling the 10 year average and in 2019 we expect this figure to be exceeded at close to 300,000 sq ft.

The backdrop of the growth story and good demand for office space has sparked interest from major investors to buy property in the City. Investment in office buildings in Milton Keynes is anticipated to exceed £100m during 2019 for only the second time since the world financial crisis in 2008. As a business we have advised on £43m of those transactions, with numerous clients targeting Milton Keynes as a new location to invest.

New investment will have a really positive impact in the coming years, with investors seeking to refurbish and improve buildings so that they are fit for contemporary occupation. The way in which businesses occupy office space and the quality of space now being demanded has changed significantly over the past few years. The return of speculative office development and major refurbishments in the City is a big step forward in a market that previously had a large stock of outdated office buildings.

As a leading UK commercial real estate consultancy, Lambert Smith Hampton is uniquely positioned to advise on property matters across the growth corridor with offices in Milton Keynes, Oxford, Cambridge and Northampton. In the past 12 months in Milton Keynes we have advised on 170,000 sq ft of office lettings, over 30 industrial transactions and £43m of office investment transactions in Milton Keynes alone. Our in depth local knowledge and national expertise enables us to best advise occupiers and property owners across a wide range of sectors and disciplines.

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