Managing director of RARE Commercial Property Jonathan Mannings gives his view of where the Thames Valley’s office market is heading.
The Thames Valley, once hailed as the UK’s Silicon Valley, is facing significant challenges as the office market undergoes a major transformation.
The region was historically the go-to destination for North American tech giants and global firms seeking a European hub, thanks to its proximity to Heathrow and its large business parks, offering generous office space coupled with good parking ratios.
However, shifts in occupier preferences, accelerated by Covid-19, have brought about substantial changes that call into question the long-term viability of the region as a leading office hub.
Even before the pandemic, a notable trend was the migration of companies from the Thames Valley to Central London, driven by the desire to attract younger talent through proximity to urban amenities and enhanced lifestyle options.
The pandemic, however, has drastically changed the way businesses view physical office space, as hybrid and remote working have proven to be sustainable models for many.
As a result, the demand for large-scale, suburban office campuses has plummeted.
The region’s expansive business parks, once filled with tech giants, now stand underutilised. Car parks, once a major selling point for out-of-town business parks, now stand largely empty as employees opt for hybrid work models that reduce the need for daily commuting.
The days of large corporate occupiers seeking vast office campuses appear to be over. Demand for office space has halved in recent months, reflecting the broader trend of shrinking office footprints.
This shift is particularly challenging for Thames Valley business parks, which traditionally offered limited on-site amenities. Without rail connections or a wider variety of services beyond a basic coffee shop, many of these parks are ill-suited to the evolving preferences of occupiers.
Instead, occupiers are now seeking flexible office solutions, ESG-compliant spaces, and urban environments with strong transport links and vibrant retail, food, and leisure amenities. Town centres like Oxford, Guildford, and Ealing are better positioned to capture this demand due to their infrastructure and amenity offerings.
While demand for office space declines, much of the Thames Valley’s surplus office stock is being repurposed. Residential conversions have been common, but other sectors are stepping in to fill the gap.
Data centres, driven by the growth of AI and cloud computing, are emerging as a major alternative use for office buildings, as seen with the redevelopment of sites in Slough and Bracknell.
Industrial and warehouse redevelopments are also becoming more prevalent, offering solutions to the rising demand for ‘last mile’ and third-party logistics space.
Some former office buildings have also been converted to lab space, though this trend is mainly confined to locations like Oxford and Cambridge, where the life sciences and pharmaceutical sectors are strong.
Reading, traditionally the ‘capital of the Thames Valley’, faces significant challenges in maintaining its status. The decline of retail giants such as Debenhams and House of Fraser has left voids in the Oracle shopping centre, and the future of the John Lewis store hangs in the balance.
For Reading to avoid further decline, it will need to attract new types of retailers and businesses that align with the changing market dynamics.
Large town centre office schemes like Station Hill offer potential but will need to deliver more than just modern office space. In an increasingly competitive market, occupiers are focused on flexibility, amenities, and sustainability credentials – all while demanding competitive rents.
The future of the Thames Valley office market will undoubtedly be smaller and more focused on flexible, urban-centric spaces. Business parks without strong transport links or diversified amenities face obsolescence and may need to embrace redevelopment.
The rise of data centres and industrial use cases provides an outlet for some of the region’s surplus office stock, but the office sector will no longer dominate the area as it once did.
Town centres, particularly those with robust infrastructure, will likely emerge as winners in the region’s transformation. However, for the Thames Valley to remain relevant, key players will need to innovate, adapt, and shift their focus towards the evolving needs of modern occupiers.
Jonathan Mannings, founder and managing director of Thames Valley specialist RARE, has been advising occupier and investor clients across the Thames Valley region for more than 35 years. Responsible for establishing and growing the Thames Valley office of Rogers Chapman (subsequently bought by JLL) and jointly founding the Thames Valley office of Cushman & Wakefield before establishing RARE, he is a recognised industry expert in analysing market data to identify future trends and providing advice to a wide variety of clients with property interests across the Thames Valley region.
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