The traditional suburban office markets in Greater London already have well-established occupier bases. Some companies have been in the same location for decades, creating a strong and loyal pool of staff who live locally and have ties to the area. 

For this reason the greatest threat to these businesses is outgrowing a borough due to the quantum of stock available and a lack of quality offices. Occupiers are effectively forced to move to a new destination in order to expand.

At present, you can find the headquarters of companies like eBay in Richmond,  Nando’s in Putney and WaterAid in Vauxhall. Not places you would expect to find firms like these, perhaps. But whether a rapidly expanding start-up or a global player, if the office supply in these boroughs remains constrained these types of organisations will have with no option but to relocate.

The problem is that the development pipeline is fairly limited in Greater London with only a few schemes currently under construction, namely ABP’s Royal Albert Docks and Quintain’s WP2 at Wembley Park, both already amassing considerable occupier interest. These large mixed-use developments provide an excellent opportunity for investors and developers to create something new or refurbish existing stock to capitalise on the latent demand and limited supply.

Those who have seized the development opportunity have not been disappointed. For example, Battersea Power Station has seen Apple take 500,000 sq ft; a strong cohort of tech firms have emerged at Stratford’s Hear East and a growing cluster of creative and media firms at White City.  

It seems that with a bit of bravery, good product and the right environment you can’t really go wrong. Yet it’s rarely that easy. Speculative development has its inherent risks and a thorough analysis of any sub-market needs to be undertaken before spades go in the ground.

But you can’t argue with the fact that there’s a shortage of Grade A space in these locations. This can largely be attributed to Permitted Development Rights (PDR), which have eroded a significant amount of office stock within key town centres as it’s been given over to other uses. Consequently, these places have all seen rental growth, which as a result has made office development financially viable. In fact, without new stock we can expect these increases to continue.

The introduction of Article 4, which will help limit more office space being lost under PDR, provides an even greater opportunity as developers will no longer have to compete with alternative uses, especially residential, for old second-hand stock. 

With this in mind, Savills has identified seven key sub-markets for those who want to capitalise on the imbalance between the lack of office supply and strong occupier demand. In no particular order these include Wandsworth, Lambeth (excluding Waterloo), Richmond, Camden (Town & North), Croydon, Merton and Newham. 

We’ll be evaluating the rationale and the potential success of each of these boroughs shortly, providing a case for bringing forward new space. We’re confident that if you build it, occupiers will come.

Further information

Contact Savills Office & Business Space