NEW HEADLINE RENTS
There is something of a contradiction at work within the Crawley / Gatwick market. Analysis of available stock shows a current glut of office supply, especially on Manor Royal. Simple economics would maintain that this excess supply will inevitably dampen rental growth prospects for a time.
Yet, in reality, we have seen rents move on with headline rents hitting an all-time record level of £27.00 per sq ft at 2 City Place, Gatwick.
In comparison to the remainder of the South East this rental level looks extremely good value, particularly when one considers the proximity to London Gatwick Airport and the national and international connectivity offered by the airport itself, as well as the adjacent rail station.
LIMITED FUTURE SUPPLY
Although supply of existing office product is considerable, it is worth noting that new office development is negligible. As well as reflecting developer / investor concern over current supply levels, an insatiable demand for industrial / distribution property has led to the hoovering up of most spare land within the Crawley / Gatwick market at extraordinary price levels.
However looking forward, at Horley Business Park which lies just to the north of the airport (but technically falls outside of the Crawley / Gatwick market boundary), up to 1.5 million sq ft of new office space can potentially be delivered over the next few years. Outside of this scheme, the choice available to those occupiers seeking high quality space will become thinner as existing office stock ages.
LARGE SCALE LEASING
There is a notable demand dynamic at work within the Crawley / Gatwick market that is in stark contrast to much of the wider South East office market. Although not receiving the pressheadlines typically afforded to the Thames Valley, the market has seen a greater volume of largerscale office / R&D deals than anywhere else in the South East, with perhaps the exception of Reading, Oxford and Cambridge.
Nestlé, Elekta, Virgin, Deloitte, L3, Thales, Novo Nordisk, Boeing / Jeppersen, amongst others have all made major, long-term commitments to the market over recent years as they have sought to benefit from relatively cheap real estate costs but excellent connectivity into London, the South East and internationally.
KNIGHT FRANK VIEW
Crawley / Gatwick’s fundamentals of multimodal transport, historically affordable land and a strong local skills base has seen the local market deliver major occupier deals, over many years - many on a pre-let basis.
The current supply conditions may dictate that ‘vanilla’ office occupiers will have a range of standing options to choose from and will expect to negotiate hard - although recent evidence suggests the best quality products in the market can still generate improving rents.
With a connection to the Elizabeth Line at Farringdon from 2019, and London bound trains every two minutes, infrastructure will be a key item for Gatwick. Oyster-users can already access the station, opening the market ever-wider to the young, skilled London population. For these workers outmigration is simply a matter of convenience and travel time, not address.