Southampton: JLL warns businesses on the risk of rising rents
A lack of quality office space in Southampton could mean that businesses looking to relocate are at risk of locking themselves into expensive and inflexible lease agreements, says property consultancy JLL.
As an increasing number of offices along the M27 corridor are being converted into homes, the office market is becoming more competitive, resulting in landlords driving up rents and requesting more stringent terms. The situation has been further exacerbated by rumours that developers of the remaining two office sites in Southampton may be applying for alternative uses.
Nella Pang, associate director at JLL in Southampton, said: “The market has changed dramatically. Compared with even just 12 months ago, tenants need to be on their mettle when it comes to agreeing deals on new office space.
“The commercial balance is shifting towards becoming a landlord-driven market now which means it is even more important to ensure businesses have the right advice and are equipped with accurate market knowledge so that they can secure the most competitive terms, in line with the rising market.”
Technology company Konica Minolta is one company that has benefited from seeking advice for their office relocation from Reading to Southampton. It called on JLL to advise on the move, including financial analysis of all options, market insight and carrying out all negotiations.
Konica Minolta moved into its new office at Gateway House in Chandler's Ford this week.
Paul Louth, facilities manager at Konica Minolta, said: “JLL has advised us on our property needs on a number of occasions. Our relocation to Southampton was very well managed and we completed the transaction within four months of our initial inspection.”
JLL has transacted 108,487 sq ft in the second quarter of 2015 out of a total of 156,107 sq ft lettings along the M27, which has mainly consisted of advising occupiers on their real estate strategies.
“Moving offices can be a minefield and a headache for anyone unfamiliar with the world of property,” continues Nella.
“In competitive markets, employing an adviser is imperative as businesses need to be able not only to identify the right property that meets their existing and long-term needs but also know how to negotiate the best terms.
“Businesses that don’t seek this advice could be at risk of overpaying on a property that doesn’t match their requirements.
“As Southampton city centre continues to undergo significant and ambitious redevelopment, business confidence will continue to rise and competition for office space will increase, so it will be more important than ever for companies to get the right advice on their property needs.”
