Croydon has become a stronghold of the greater London office market in recent years, offering good quality space at a considerable discount to nearby central London. Consequently, the town’s popularity with occupiers has continued to grow with take-up more than doubling in 2018 as demand for Grade A space remains at an all-time high, particularly space within close proximity to East Croydon Station.

However, despite this good news, the strong level of take-up in recent years, alongside the loss of 3 million sq ft of office space to permitted development rights, has in turn led to a chronic lack of good quality supply with two of the town’s only Grade A buildings, Renaissance and Interchange, now fully let. In fact, vacancy rates remain at sub 3 per cent, one of the lowest in any Greater London market.

As a result, the town has seen rental levels soar with an increase of as much as 45 per cent in the past five years, with Green Network Energy paying a record £34 per sq ft at M&G’s Renaissance building. Yet, despite this, Croydon still offers comparably good value compared with other greater London markets including Clapham, Richmond and Wimbledon where rents per sq ft currently stand at £50, £49.50 and £52 respectively.  

This in theory should make it the perfect time for developers to stake their claim to Croydon, but there remains a lack of urgency to put spades in to the ground. Just one 40,000 sq ft building is due to undergo redevelopment by Mayfair Capital at 28 Dingwall Road, however, with floor plates of just 6,000 sq ft, this may deter larger corporate occupiers.

In terms of speculative development, Ruskin Square (pictured above) is the only scheme which could conceivably deliver Grade A space in the short term to cater for current demand.

While there remains a relatively good amount of 1960s-style refurbished Grade B stock, this really only appeals to smaller and more local occupiers who are looking for sub 10,000 sq ft. For something larger and of better quality, available space is incredibly limited, especially as there is now just over one year’s worth of supply left.

This is not ideal, especially for big corporates looking to make their escape from the expense of central London. To date, there have already been a number of relocations by occupiers who are attracted by the town’s unrivalled transport links, providing short journey times into both London Bridge and Victoria from East Croydon station. This includes large firms such as EDF Energy and Selection Services.

Office space aside, Croydon has also undergone extensive regeneration in recent years. In the past decade more than 6,600 residential units have been delivered, with more in the pipeline, as well as a rich mix of amenities, including BoxPark and Westfield and Hammerson’s proposed new retail and leisure centre. All of which has helped to boost the town’s popularity with prospective occupiers.

However, with no new buildings in the pipeline, it is likely that some businesses may be forced to choose alternative locations as the town simply can’t meet their requirements. With the demand clearly there, now is the time to create new space in Croydon.

Further information

Read more: Greater London and South East Office Market Watch