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The M25 Report
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Foreword

Structural change is upon us. It is challenging the dynamic of the M25 market. It requires a new approach to investment and development that utilises new wave technologies to offer service, flexibility and vibrancy through real estate.

 

A new reality is emerging in the M25 market. Since we started specifically researching the market 30 years ago, we’ve seen cycles- the early 90’s crash, the dot.com bubble of 2001, quickly followed by 9/11, the Global financial crash of 2007. After each, we saw the market dynamic recover to a similar pattern of supply and demand, some markets quickly back to equilibrium, others taking longer.

Several themes are driving a change to the historic cycles. The dominance of London as a source of labour, the imminent arrival of the Elizabeth Line, and most significantly technology, the demand for offices space to be seen as a service, not just as bricks and mortar and for workspaces to be vibrant and exciting- talent magnets. The old cycles are over and a new structure has begun to emerge.

With its proximity to London, the M25 and Thames Valley region is well placed to respond to this new structural reality and those landlords with assets which address the demands of the forward thnking occupier will be the winners. Key centres with the best connections stand out- Reading, Maidenhead, Watford and Woking. Many might think this means only town centres will thrivethink again. As overarching ownerships in business parks allow for the curation of services that are bespoke to a group of customers whose data informs the landlord what’s needed, and what’s not, those edge of town schemes can provide exciting alternative choice.

Over the last 24 months the market dynamic has shifted to one focussed on smaller, flexible requirements, and often demanding a serviced approach. In 2016 just 2% of take-up was from serviced operators- this rose to 12% in 2017. Some M25 centres are now attracting providers outside the ‘traditional’ operators. This take-up is in response to the new demand dynamic.

The quality of the workplace is also affected by age- and with stock in the M25 centres now showing signs of obsolescence caused by age, there is a case for selective new development. We have seen the recent completion of the speculative development wave, which started in 2016. From mid 2018 supply will peak and then reduce.

So while we may believe the uncertainty surrounding Brexit has been the biggest impact on the market; by stealth, the impact of technology, the demands placed on the office workplace to be service centered and dynamic, and the need for flexibility have been impacting, accelerating the changing face of occupier take up. Imperative to this is an understanding of demand, how investors will respond, and what’s coming in the pipeline.

Structural change is upon us. Ultimately, it will play-out in different ways across different markets. In an area as diverse as the M25 it is vital to have a detailed and granular understanding of current market conditions and future dynamics.

Consequently, this year’s report provides you with detailed analysis of 18 key markets across the M25. Each submarket page provides the insights and data necessary to guide your next market move.

 

 

 

The M25 Report

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