BUSINESS PARK DOMINANCE
Blackwater Valley incorporates Aldershot, Farnborough, Fleet, Frimley and Camberley. Supported by ease of access to the M3 and just a short hop to central London, an out-of-town office market has developed within this region. The Blackwater Valley accounts for 18% of total office stock in the M3. Partly due to the limited appeal of the town centres in this area, market activity is dominated by 10 business parks.
Notably, Farnborough accounts for half of the business park presence and whilst historically, occupier demand has been spread across the region, Farnborough has most recently been the centre of activity. The town accounts for two thirds of occupier take-up within the Blackwater Valley over the past five years.
Although demand has proved relatively diverse over time, the area has a strong historic connection to the aerospace industry and technology occupiers. The TMT sector, for example, accounts for 18% of take-up over the past 15 years, with firms such as IBM, Siemens, and CSC all having established headquarters within the Blackwater Valley.
Farnborough is also the home to the national headquarters of the UK’s largest aerospace company BAE Systems, Boeing’s state-of-the-art network-enabled centre for collaboration and experimentation and QinetiQ’s Cody Technology Park. Global brands such as BMW, Time Inc, and Fluor have also secured a significant presence in the area in recent years. In fact, BMW’s acquisition of the Nokia Campus in 2013 represents the second largest occupier acquisition in the South East since our records began.
On the supply side, office stock in the area has seen a reduction of close to 10% in recent years, as conversion to residential use has gained favour through Permitted Development and market conditions rendered new speculative starts a bold call.
This has meant that availability has shrunk markedly, dipping to 396,700 sq ft at the end of 2017. Nonetheless, the Blackwater Valley still accounted for 17% of available stock within the M3 region at year-end. Future development in the area is limited and is dominated by refurbishments.
The first phase of Canmoor’s Ascent scheme at Farnborough Aerospace Centre has completed, with the balance to follow over the next 12 months. Once complete, this will have delivered c.135,000 sq ft of Grade A space to the market.
KNIGHT FRANK VIEW
The statistics speak for themselves – there is a critical mass of blue chip companies closely linked to the aerospace, defence and technology industries clustered around Farnborough. Will it continue to lead the way for Blackwater Valley in terms of investor and occupier activity?
More than likely, given the continued letting success of Farnborough Business Park over recent years (recently acquired by Frasers in one of the largest South East investment transactions in 2017) and because of the critical lack of Grade A office supply other than the pipeline at Farnborough Aerospace Centre.
We live in a digital age where cyber security is becoming ever more important and could lead to increased occupier demand as new contracts are awarded – the Blackwater Valley is well placed to take advantage of this potential trend.
In addition, engineering firm Fluor, who seem to be constantly expanding at Farnborough Business Park or the Aerospace Centre, are also driving take-up levels. On the flipside, some more marginal locations seem to be struggling - Ancells Business Park, for one - and there is much talk about Novartis moving part of its operations to West London, which would be a blow.