Businesses looking to upgrade their company premises from Grade
B to Grade A stock are expected to play an integral role in the
growth of the office market in the coming years, according to
residential and commercial property specialists, Knight Frank.

Take up for office space within the M25 has focused almost
solely on prime work space, which has encouraged speculative
development of new-build commercial property.

As many as nine new development schemes, providing up to 740,000
sq ft of new office space, are well underway with prime locations
in the Thames Valley attracting increasing interest from
developers.

Emma Goodford, head of South East offices at Knight Frank, said:
"Good buildings in good locations are letting. It isn't rocket
science - companies with strong balance sheets can afford to pay
the best rents for the best quality space.

"Churn by occupiers wanting to upgrade their space will drive
the market and we predict this will account for more than 80%
take-up.

"Key markets in the Thames Valley are attracting the most
attention from developers. However, developers may also consider
those towns with a combination of high lease events at Grade B
buildings which have low Grade A supply.

"Based on these criteria, Richmond, Croydon, Woking, St. Albans,
Crawley and Gatwick arguably offer the best development
prospects."

The South East as a whole is fast becoming an international
market for commercial property developers, attracting multi-million
pound investment and attractive yields.

Not only can developers buy space at a significant discount to
Central London office space, foreign
investors are looking to take advantage of the weak Pound and
stable political climate.

Tim Smither, head of South East investment at Knight Frank,
added: "Banks will continue to play an increasing role in the South
East office market as they continue to work through their loan
books.

"For investors considering the disposal of poorer quality stock,
our message is to sell now as pricing is unlikely to recover for
some time. However, vendors need to be realistic on pricing."

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