The Elizabeth Line, the multi-billion-pound new train line linking the east of London with the west, opened a year ago to much fanfare and much anticipation from the property industry.
The line passes through 41 stations and runs for more than 100km – from Reading and Heathrow Airport in the west to Shenfield and Abbey Wood in the east. It services two stations in the Square Mile, Farringdon and Liverpool Street, with a train running in each direction every five minutes, and it slashes the time it takes to get from Heathrow to central London.
Its impact on development around central London stations such as Bond Street and Tottenham Court Road had already been felt when it opened and it has remained clear and apparent subsequently. When it opened last year a CoStar review of the history of the development included CoStar research that found that average office rents had soared by more than 70% in properties within a quarter-mile radius of Tottenham Court Road and Farringdon stations, previously less loved London areas for offices. Whitechapel and Liverpool Street had also recorded increases above the central London average of 47.6% over the past 13 years. Conversely, some areas along the route had been far less impacted, particularly Canary Wharf, where average office rents were only about 20% above their 2009 level, according to the data.
Now that a year has passed since its opening, what of those markets stretching further afield to the west down to Reading and the Thames Valley and west London and Heathrow? The data is tough to pull apart from the wider difficulties faced by occupier markets across the region as businesses have wrestled with their office needs as they recover from the impact of COVID-19 and widespread working from home.
But exclusive research from Knight Frank finds that "bit by bit" those markets that are being served by a new Elizabeth Line station are benefiting from stronger demand and take up than others in the region, particularly as occupiers scouring the business districts in town centres such as Maidenhead and Slough have become more focused on the best-located and amenity rich areas and the best quality space.
KF says what is clear is the major office markets outside of central London that are now served by the Elizabeth Line have seen a strong increase in leasing transactions in the most prime developments in the year since it opened.
This is particularly the case as more companies move to more sustainable office buildings which meet EPC regulations coming into effect. KF says that it expects lease expiries in older, non-compliant buildings to be the major driver of office take-up in the region going forward.
KF says that since work on the project - formerly known as Crossrail - began in 2008, the nine Elizabeth Line locations that fall within the South East market have accounted for 25% of total office take-up. Since 2008, 11.8 million square feet has been let at locations along the Elizabeth Line and within this Reading accounts for 45% of the take-up completed at locations on the Elizabeth Line.
In the past 12 months since opening, the stand out location has been Maidenhead where take up totalled 124,300 square feet, up 38% year-on-year. KF says 80% of this has been for prime new office buildings, or ones comprehensively refurbished to meet modern standards. Larger transactions have been JP Morgan Global Alternatives deals with Biogen, Ultra CSS transactions and other tenants for in excess of 100,000 square feet at Foundation Park.
The adviser forecasts that 726,400 square feet of office leases will expire in the next two years in Maidenhead with just 129,100 square feet of new office space expected to be delivered during this period.
In West London, including Ealing and Acton, office take up over the past 12 months totalled 272,500 square feet, up 7% year-on-year. KF reports that 1.8 million square feet of office leases will expire in the next two years, and 982,200 square feet of new office space is expected to be delivered during this period.
In Heathrow there have been 142,000 square feet of office leases agreed in the past 12 months. 701,500 square feet of office leases will expire in the next two years, with just 125,000 square feet of new office space expected to be delivered during this period. 95% of this has been for prime new office buildings, or ones comprehensively refurbished to meet modern standards.
The largest recent letting has been that of Keyence taking 24,350 square foot at Stockley Park. Tritax Property Income Fund and Marick Real Estate signed Keyence, the Japanese technology manufacturer, in April at the park in Uxbridge,
Keyence signed to take a floor at the redeveloped Union Building at 1 Furzeground Way at the west London park. The group is moving to take the second floor from its home at the nearby Heathrow House.
In Reading,traditionally the largest Thames Valley market, office take up over the past 12 months totalled 212,900 square feet, down on the long-term average.
KF's head of South East and Greater London offices Roddy Abram describes the figures as a "moment in time" in a market that has not seen the normal handful of large-scale moves take place as occupiers press the pause button.
It is understood that Visa's expected circa 75,000 square foot move in the town centre has been put on ice for now as it regears its lease on around 50,000 square foot at its home at Kennet Wharf for a short term of around three years.
KF says 95% of lettings over the past 12 months in Reading have been for prime new office buildings, or ones comprehensively refurbished to meet modern standards. It says
1.4 million square feet of office leases will expire in the next two years, with just 676,500 square feet of new office space expected to be delivered during this period
In Slough, office take up over the past 12 months has been disappointing with 65,000 square feet. KF says that 535,000 square feet of office leases will expire in the next two years, with no new office space expected to be delivered during this period.
Abram says Slough has seen a secondary change and a shift in focus on one of its key locations the Bath Road with conversions to resi having eroded the office market and principal landowner Segro shifting its focus to industrial and data centres.
"There has been a slimming down of the Slough market and going forward the immediate buildings around the train station will broadly make up the core Slough office market."
Abram says of the Elizabeth Line impact: "It has been a long time coming and the expectation from the market has been big. Now it is here the impact has been positive as an additional form of transport into the Thames Valley and a converging core of South East markets. Bit by bit it is making a difference.
"What it does is add to what might have been a direction of travel - the convergence of the Thames Valley into more substantial established markets with a commercial hub and substance as well as education and amenity and strong staff catchment."
Abram says a number of large occupiers are reviewing their property strategy in the region and the Elizabeth Line opens at a convenient time. Names such as Wood Group, 3M and Pepsi Cola are all known to be in the market, with Visa expected to come back out looking in Reading soon.
"Businesses with offices in the Thames Valley, such as Visa and Microsoft are clearly influenced by the speed and ease into Paddington and central London. Going forwards it is the regularity of communication and ease and speed of that into London as well as the fact that it opens up more avenues of connectivity across the region that will matter."