Interesting piece of research emerged from Lambert Smith Hampton's Thames Valley office this week. They've done a bit of off-beat pondering linking Heathrow Terminal 5 to office rents in the area. When terminal 4 completed in 1986 the extra wings over Berskhire's offices led to a bull market. Office rents doubled from £17.50 per sq ft (in the early 90s) to £35 per sq ft (2001). Admittedly, the report says prior to terminal 4 construction the east side of the airport was an industrial heartland and the market [excuse the pun] took off in a huge way. It's unlikely we'll see a similar jump with terminal 5.
Having said that around 67million passengers shuffled through Heathrow
last year. With terminal 5 that should increase to 90m. By 2030, the Department of Transport are predicting a doubling in passenger figures (equivalent to 4%pa growth).
LSH are being more cautious and have used an increase of 2.5%pa to guide their sums. Even if only some of that feeds back through to the market it would be nice as LSH's latest figures show rents down a quarter from the peak at £25 per sq ft (link to pdf is: TV Office Market_FULL DOC.pdf ).
We report similar findings in this week's EG which covers not just the Berkshire market but also Bedfordshire and Oxfordshire. The bad news for developers is that changes to Thames Valley office rents lag about a year behind changes to passenger levels in Heathrow. This at a time when developers are already feeling sore after mayor Boris Johnson announced plans to extend the Crossrail levy out of the capital. Melanie Smith explores this further in this week's mag.
The lovely people at LSH have given me the graph below to show this:
Higher
capacity jets such as the A380 will help but at the heart of the
research is a bid for a third runway and an extension of the high speed
rail network to link Heathrow with Europe. What are the chances of both
of those happening together and soon - well, I'll reserve judgement and
let the pic at the top of the post guide your imagination.
PS. There's some interesting stats on the Department of Transport's website looking at passenger number forecasts with and without a third runway here.
Picture by macieklew used under Creative Commons http://www.flickr.com/photos/macieklew/ / CC BY-SA 2.0
LSH are being more cautious and have used an increase of 2.5%pa to guide their sums. Even if only some of that feeds back through to the market it would be nice as LSH's latest figures show rents down a quarter from the peak at £25 per sq ft (link to pdf is: TV Office Market_FULL DOC.pdf ).
We report similar findings in this week's EG which covers not just the Berkshire market but also Bedfordshire and Oxfordshire. The bad news for developers is that changes to Thames Valley office rents lag about a year behind changes to passenger levels in Heathrow. This at a time when developers are already feeling sore after mayor Boris Johnson announced plans to extend the Crossrail levy out of the capital. Melanie Smith explores this further in this week's mag.
The lovely people at LSH have given me the graph below to show this:
Higher
capacity jets such as the A380 will help but at the heart of the
research is a bid for a third runway and an extension of the high speed
rail network to link Heathrow with Europe. What are the chances of both
of those happening together and soon - well, I'll reserve judgement and
let the pic at the top of the post guide your imagination.PS. There's some interesting stats on the Department of Transport's website looking at passenger number forecasts with and without a third runway here.
Picture by macieklew used under Creative Commons http://www.flickr.com/photos/macieklew/ / CC BY-SA 2.0
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