Arc Market Databook - Bidwells
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Summer 2021
Arc Market Databook
OFFICES
M1 SOUTH
74k sq ft
Although take up in Milton Keynes eases
in H1, activity is set to increase in H2
with 50,000 sq ft under offer at the end
In common with many areas across the UK, the Milton Keynes office
of the period
market is experiencing a period of uncertainty as businesses review
occupational strategies in the wake of the pandemic. However, there
80k sq ft
are reasons to feel positive about the city’s office market going forward.
Santander has designated its city centre Unity Place development its new
UK HQ. Moreover, the number of office space requirements in the city are
up by over a quarter on last year, albeit businesses are often trading size
for quality. Grade A supply in Milton Keynes
remains constrained, with only 80,064
With very little grade A space available, this will present a challenge. The sq ft on the market
market will need to adjust to the shift in priorities, but the acceleration
of plans to refurbish Northgate House is a positive sign. The opening of
the Santander HQ in 2023, combined with a positive business outlook
for the city’s tech sector in particular, will provide an economic fillip to
Milton Keynes over the next few years. This will drive rental growth and
potentially spur forward further refurbishment and redevelopments to
accommodate the emergent office landscape.
bidwells.co.uk/research
News highlights
Milton Keynes return to work gathers 111 bank branches along with a number of MK:U announces first pilot degrees
momentum office locations. Santander has recently for business
Through the use of Google Maps, recent put its 115,000 sq ft call centre at Shenley MK:U launched its first four pilot Degree
research undertaken by merchant payment Wood House on the market, with the Apprenticeships in May 2021, with
company Dojo has shown that the number majority of staff to work from home until courses due to start in September
of workers returning to the office in Milton Unity Place becomes operational. 2021. The degrees will focus on the
Keynes is amongst the highest in the UK. technology sector, covering data science,
Occupier demand for quality office
Data from April showed that footfall was cyber security, digital and technology
space brings forward refurbishments
up by 14% compared to the height of the solutions along with a general business
There is no doubt that many occupiers
pandemic in mid January, reflecting a management course. Plans for MK:U’s
are reducing their office floor space
return to the office after the end of the permanent home in Central MK are
requirements, but Bidwells’ Milton Keynes
third lockdown. This upturn is consistent progressing with Cranfield University,
office has seen a surge in demand for
with the national picture, captured in the Milton Keynes Council and its business
accommodation of 20,000 sq ft and
latest ONS statistics which reveals a record backers promoting the cause to the
below. With the scaling back of a number
level of recruitment by UK companies in government’s new National Science and
of larger requirements, demand for smaller
June and rising wages. Technology Council.
suites stood at 221,600 sq ft at the end
Santander announces Unity Place to of H1 2021 - its highest level since 2017.
become its UK headquarters But, whilst the scale of requirements has
Santander’s new 398,000 sq ft technology eased, businesses are focusing on better
hub at Unity Place in Central MK is to quality stock. This has brought forward
become the bank’s UK headquarters when plans to upgrade space by landlords, with
it completes in 2023. The announcement the comprehensive refurbishment of the
follows the news that the bank will close 33,807 sq ft Northgate House in the city
centre due to commence in H2 2021.
Milton Keynes Offices
The largest transaction in H1 2021 was the 25,729 sq ft letting to the
Department for Work and Pensions at Phoenix House in Central MK
Office supply (June 2021) Office demand (June 2021) Office rents (June 2021)
Grade A Take up Requirements
Grade B Grade A 50
Availability rate (rhs) Grade C 10 - 20
10 yr average 20 - 30
900 17% 350 1,200 35
£32.00
£32.00
£30.00
£29.00
£28.50
800
£28.00
£28.00
16% 300 1,000 30
700
15% 250 25
600 800
500 14% 200 20
600
0.0%
1.8%
1.8%
3.4%
6.7%
0.0%
400 13% 150 15
300 400 0%
12% 100 11% 10
200 26%
11% 220
50 37% 5
100
5%
0 10% 0 0 21% 0
20
21(f)
22(f)
23(f)
24(f)
25(f)
26(f)
2016
2017
2018
2019
2020
2021 H1
2016
2017
2018
2019
2020
2021 H1
2016
2017
2018
2019
2020
2021 H1
Availability 000’s sq ft 810.2 p 2021 H1 Requirements Prime £psf £28.00 }|
Availability rate 15% p Take up 000’s sq ft 73.8 q 000’s sq ft 351.6 p Secondary good £psf £25.00 }|
Secondary poor £psf £13.50 }|
Annualised growth rate 2.5% p.a
Capital Markets
Investment activity in the M1 yield of 9.00%. There are various
south office market was asset management opportunities Milton Keynes Prime Office Yield
dominated by transactions in available at Marlborough Court, with
8.00%
Milton Keynes, where sales the average lease term to break
continued at similar levels to standing at just over 2 years.
those seen in the previous 12
One of the more interesting 7.50%
months.
transactions was the purchase of
Drakes Mews Business Centre at
A total of £20.6m of office
Crownhill by The Parks Trust for 7.00%
transactions were completed in
£4.4m. The centre offers 27 small
Milton Keynes in the first six months
business units and studios, with
of 2021, compared with just under
the Trust currently refurbishing the 6.50%
£50m during the whole of 2020.
units.
Activity has been focused on lot
sizes below £10m.
6.00%
The largest transaction in the year
to date was the purchase of the
44,240 sq ft, multi let Marlborough
5.50%
Court at Linford Wood Business
Park for £6.9m, reflecting a net initial
5.00%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021 H1
Source: Bidwells
Key Bidwells transaction The facts
Drakes Mews, Milton
Keynes
Bidwells’ leasing and Capital
Markets teams advised on the
£28 psf
Prime office rents in Milton Keynes remain stable, with
freehold sale of Drakes Mews good quality second hand rents at £25 per sq ft
Business Centre in Milton
Keynes. Comprising of 27
13%
small to medium enterprise
office and industrial workshop
units, the property extends to
51,475 sq ft and provides the
purchaser, The Parks Trust,
with asset management Increase in office floorspace requirements in
potential for the estate. Milton Keynes since the end of 2020
14.3%
Five year forecast increase in prime office rents in
Milton Keynes, rising to £32 per sq ft by 2025
Milton Keynes office locations A509
M1
A508
X M
A422
E J.14
C B University Campus
U
A509 V W
A5
CITY
A. Caldecotte Lake Business Park CENTRE
B. Linford Wood Business Centre
Q P
C. Warren Park J.13
D. National Energy Centre Open University
E. Old Stratford Business Park K
National Campus A4146 M1
F. Station Square
G. Santander House
H. Victoria House A
I. Central Business Exchange D N
J. Exchange Square O
K. Routeco Business Park
L. Genesis House
M. VW Campus, Tongwell J
N. Challenge House A421
O. New City Place (to be developed) L I
P. Wavendon Business Park A4146
R
Q. Kents Hill Business Park G
R. The HUB:MK
S H
S. The Pinnacle:MK A5
T. 100 Avebury Boulevard Bletchley Park
U. Woodlands Business Park F
V. Eastlake Park
W. Atterbury T
X. Manor Farm Court
Holly Dawson
Partner, Business Space Agency
07917 243 887
holly.dawson@bidwells.co.uk
Saul Western
Partner, Capital Markets
07899 061 889
saul.western@bidwells.co.uk
Arc Market Databook
Sue Foxley
Research Director
07971 402 527
sue.foxley@bidwells.co.uk
bidwells.co.uk/research
Bidwells is a trading name of Bidwells LLP, a limited liability partnership, registered in England and Wales with number OC344553.
© Copyright Bidwells LLP 2020. Before taking any action based on this document you should consult Bidwells LLP to ensure that
it is appropriate to your circumstances. Bidwells LLP is in no way responsible for any views expressed within this document.
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