The end of London’s Elizabeth line is awash with empty offices
Office tenants are slow to head westwards, and the town of Reading alone has enough office stock to last 4.7 years
[LONDON] The Thames Valley is full of empty offices, with a total of approximately 50 years’ worth of supply across the region at the current rate of new leases.
The suburbs and satellite towns on the western fringes of London have seen a wave of development, built on hopes that the new Elizabeth Line train service would create demand.
So far, office tenants have been slow to head westwards, and the town of Reading alone has enough office stock to last 4.7 years, according to data compiled by broker Lambert Smith Hampton (LSH).
The Elizabeth line, known as Crossrail during its 13-year construction, has rapidly become the busiest train line in the country, shuttling passengers more than 70 miles between Reading in the west and Abbey Wood and Shenfield to the east, via central London.
While it has reshaped the region in many ways, from slashing the Heathrow journey time to unearthing plague pits below new stations, it has yet to spark a rush toward relatively cheaper commercial properties on the outskirts.
One Station Hill, the largest ever speculative project in the history of the Thames Valley, is about 70 per cent pre-let after completing at the end of last year. While the developers behind the project on the doorstep of Reading station have planning consent for a second phase, exact timings are uncertain.
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Forbury Place, another office estate a short walk from the newly overhauled transport hub, was a major win for developer M&G in the years before the Elizabeth line opened. The first phase, 1 Forbury Place, was built and rented out in 2015 before being sold to clients of Citigroup’s private bank for £100 million (S$173.6 million) in 2022 – the same year the train line launched.
That deal represented the tail end of an investment boom as landlords anticipated the opening of the new railway. Developers spent £500 million a year in 2017 and 2018, double the long-term average, according to data compiled by LSH.
But subsequent phases have not fared as well. After kicking off construction of 2 Forbury Place in 2015, almost 60 per cent of the office space remains vacant.
And M&G has been attempting to sell 3 Forbury Place, a neighbouring office it acquired alongside the two new developments, since 2022. Originally listed for £86 million, the price tag was cut almost in half to £45 million last year.
Negotiations are ongoing and the building is now expected to sell for less than £30 million, people with knowledge of the process said, asking not to be named discussing sensitive details of the deal.
A representative for M&G declined to comment.
Across central Reading almost 17 per cent of office space lies vacant, according to real estate data company CoStar Group. This is down slightly from 18 per cent a year ago, yet remains above the national average and the pre-pandemic norm.
“Despite rising demand for good-quality space, vacancy in four- and five-star buildings is relatively high, at over 20 per cent,” the company wrote in a report earlier this year.
Some businesses that once populated the business parks and vast office campuses west of the UK’s biggest city have instead moved inward, clustering in central London with its concentration of skilled graduates, transport and entertainment options.
Amazon.com has moved thousands of staff out of Slough, another Thames Valley town with a gleaming Elizabeth line station, and set up base near London’s Liverpool Street, one of the central stops on the new line.
Global drinks giant Diage has relocated from Hammersmith, in west London, to the more central neighbourhood of Soho. Apple moved thousands of staff from various offices across west London to the newly renovated Battersea Power Station in 2023.
Microsoft, which occupies a major office campus in Reading, had also considered moving to central London, but plans to take a 500,000 square foot office were reported to have been put on hold in 2023. Microsoft declined to comment.
The shift of big companies to the centre leaves a glut of tired office buildings that few investors or occupiers want. Some are being converted to apartments, an asset class that has benefited from the improved links to central London.
EEH Ventures acquired an office building in Reading called Abbey Gardens for £12.4 million in December 2024, about half the £25 million asking price, which it plans to turn into apartments. Previous owner, Palm Capital, paid £40 million for the site in 2017.
Across South East England about four million square foot of office space, the equivalent of about eight Gherkin skyscrapers in the City of London, has disappeared over the past year, according to LSH.
“These conversions should help bring down the vacancy rate in older buildings in the town, where office demand is weakest,” said Mark Stansfield, senior director of market analytics at CoStar.
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