South Coast
Offices, Industrial & Retail Report
Russell Miller
Regional Managing Partner
South Coast
Executive summary
A story of resilience despite uncertainty
Despite a shaky start to 2025 due to economic and geopolitical headwinds, the commercial property markets across the South Coast have shown resilience. Activity in offices, industrial, and retail sectors has remained relatively stable, underpinned by strong demand for high-quality, sustainable space.
The office market in H1 was relatively subdued, with many businesses in a holding pattern as they awaited clarity on costs like National Insurance increases.
Occupiers continue to prioritise ESG-compliant, Grade A space, with demand centred in Southampton, Portsmouth and Bournemouth. Even so, supply of premium office stock continues to be limited. This is driving rents upwards, placing the emphasis for landlords on refurbishments over new builds. As we head towards the end of H2, lease events are expected to drive most activity in this market.
Logistics, defence, aerospace, leisure, and healthcare are the driving forces behind the industrial market on the South Coast currently, where post-pandemic momentum has tapered into a more sustainable pace. Landlord incentives are increasing and rental growth has slowed, but this is back to what we would deem to be more ‘normal’ levels.
Land scarcity and infrastructure bottlenecks such as power supply challenges continue to limit speculative development across the South Coast, yet there remains strong demand for units, particularly for mid-sized units (10,000-50,000 sq ft) with high ESG credentials.
In the retail market, we saw prime retail rents and occupancy levels stabilise in H1, with rents rebased. This has supported activity, and we will continue to see adaptive reuse and curated experiences shape the evolution of high streets across the South Coast. Meanwhile, out-of-town retail and drive-thrus continue to do well as consumer demand remains strong.
Overall, activity in the office, industrial, and retail sectors remained stable in H1, underpinned by strong demand for high-quality, sustainable space. The challenge will be how landlords and investors can answer the ongoing demand for space through investment in their assets to continue this momentum into 2026.
Office Insights
The overarching theme across the South Coast office market in the first half of 2025 was one of constrained supply and subdued transactional activity. Those deals that completed were predominantly in out of town locations.
While there has been a consistent flow of enquiries, many occupiers remain in a period of reflection, reassessing their post-pandemic workspace needs. Early adopters of the return-to-office trend are now consolidating – either expanding their footprint or right-sizing to better reflect hybrid working patterns.
In H1 2025, approximately 185,000 sq ft of office space was let across the South Coast – a figure that suggests a short-term increase compared with H1 2024, as occupiers adopt a more cautious stance in response to economic and geopolitical uncertainties.
Q2 delivered 75,000 sq ft of take-up – broadly in line with seasonal averages – with standout deals including a 24,000 sq ft letting at 1000 Lakeside Building, Portsmouth, and two lettings at Twenty3 Brunswick in Southampton, spanning a cumulative 26,000 sq ft.
We expect office market momentum to continue through H2, with rising demand and limited supply adding an upward pressure on rents. This is encouraging news for investors, providing a stronger case to invest in new and refurbished office stock – particularly high -quality, sustainable space meeting the expectations of the modern occupier.
There have been several high-quality refurbishments over the last 18 months in Southampton, Portsmouth, Bournemouth, Chandlers Ford / Eastleigh, Solent Business Park, and cathedral cities like Winchester.
Occupiers continue to prioritise quality as they work to bring staff back to the office, and ESG credentials remain front and centre of decision-making. The success of schemes like Twenty3 Brunswick Place highlights this trend. Landlords planning refurbishments should aim for BREEAM Excellent certification and EPC A ratings to remain competitive and improve rents.
Demand has been particularly strong for sub-5,000 sq ft Category A or A+ space, especially in well-connected areas such as Chandlers Ford / Eastleigh, which combine transport links with ample on-site parking. In central Southampton, office demand remains strong, aided by the recent regeneration efforts.
In Portsmouth, activity continues to centre around Lakeside North Harbour which consistently achieves rents of around £25.00 psf, though the city centre could benefit from renewed office market momentum in the future, thanks to Portsmouth City Council’s Civic Quarter regeneration programme, which we are actively advising on.
In Dorset, the shortage of high-quality office supply persists, with significant pent-up demand. Yet development viability challenges and current rent levels continue to suppress new construction. Demand is so strong that some schemes previously earmarked for office-to-residential conversion have reverted back to office use following refurbishment. In the past six months alone, over 40,000 sq ft of refurbished space has been let. With a further 25,000 sq ft at Waverley House soon to be launched, following the success at Wessex Fields, we expect strong interest and rapid take-up.
Looking ahead, the success of the region’s office market over the next three years will hinge on the delivery of refurbished, high-quality space to meet ongoing occupier demand. The message to landlords and investors is clear: “Invest in your office asset – and occupiers will follow.”
That said, the road ahead is not without its challenges. Businesses are facing rising costs, including increases in National Insurance contributions and the looming impact of Business Rates Revaluation 2026. For many, the path of least resistance may be to stay put and defer the cost of relocation and fit-out.
Despite this, lease events and shifting occupational needs will continue to drive market activity. For those businesses, only best-in-class offices will be considered. As a result, we expect to see further upward movement in rents, driven by the scarcity of premium stock across the South Coast.
Key transactions
Bournemouth
Location: Loewy House
Transaction type: Letting
Size: 21,238 sq ft
Rent: £15.50 psf
Tenant: Avic Cabin Systems (UK) Ltd
Landlord: Lewis Investment
Portsmouth
Location: Building 1000 Lakeside, North Harbour Portsmouth, PO6 3EN
Transaction type: Letting 10 year lease
Size: 23,650 sq ft
Rent: £27.50 psf
Tenant: Confidential
Landlord: Portsmouth City Council
Southampton
Location: Twenty3 Brunswick Place, Southampton
Transaction type: Letting 10 year lease
Size: 13,069 sq ft
Rent: £30 psf
Tenant: Starling Bank
Landlord: Fidelity UK RE
Spotlight on
Availability
The availability of Grade A office space across the South Coast remains extremely limited. The region’s coastal geography poses a natural barrier to expansion, constraining the pipeline for new supply and making high-quality space a rare commodity.
As a result, any genuine Grade A stock is typically let very quickly, and while a small amount of secondary space remains on the market, tertiary stock is now largely exhausted.
Looking ahead, we expect to see new Category A+ space enter the market primarily through comprehensive refurbishments rather than new construction. For many occupiers, this presents an attractive proposition: refurbished space allows them to avoid upfront capital expenditure, with fit-out and services typically included within the rent - a cost-effective, turnkey solution that aligns well with hybrid working models and modern expectations.
Total Sqft Available Per Town – Office
Demand remains strong for premium space in key regional buildings, including:
- Twenty3 Brunswick Place, which continues to attract strong interest thanks to its quality and ESG credentials.
- 2 Charlotte Place, which had been fully let, now has 33,000 sq ft available again – particularly suitable for those seeking larger floorplates. Given the pent-up demand, this won’t remain on the market for long.
- For smaller occupiers, White Building offers an excellent opportunity, with a number of suites currently under offer.
In Dorset, the Wessex Fields development has been a standout success, driving renewed confidence in the market and prompting the landlord’s decision to refurbish Waverley House, which is now poised to meet growing demand.
Elsewhere, Melbury House has seen a flurry of lettings, with Vail Williams securing 14,375 sq ft of lettings across four floors since it was refurbished.
Notable recent deals include:
- Stonewater, one of the UK’s largest social housing providers, taking the 6th floor.
- Optical Express, a national laser eye surgery clinic, securing a ground floor suite.
Both transactions were negotiated by Vail Williams, highlighting the continued appetite for high-quality, well-located office space across the region.
Bryony Thompson
Agency Partner
Vail Williams LLP
Bournemouth’s Untapped Office Market Potential
“Bournemouth occupiers rightly want to have their cake and eat it. They want to be in Grade A office space in the town centre, boasting a variety of specification – from open plan office space and collaboration areas, to Zoom booths and meeting rooms.
“Alongside that, they also want better energy efficiency and sustainability credentials such as good EPC ratings or BREEAM Excellent and Fitwel ratings, but they will need to be prepared to pay for the rise in rents that investment in refurbishment and improvements will inevitably bring.
“The challenge for Bournemouth, and its commercial property landlords, is delivering against occupier needs in the town centre, where quality stock is needed most. But invest in an ageing asset, and they will come.”
Prime Office Rents (psf)
Rents
The general tone for office rents on the South Coast is heading upwards. This is particularly true for the prime office space boasting good energy efficiency credentials, and in particular for Category A+ space, which commands the best rents in the market.
Whilst we are yet to see delivery of Cat A+ stock in the BCP market owing to a lack of confidence in delivery of such stock, this may well come in the future, depending on how the economic climate evolves in H2.
Rents in the secondary office market on the South Coast remain stable, but this is primarily down a lack of demand for this stock, and there is very little activity in this area of the office market currently.
Rents in Portsmouth are sitting at the £25.00 psf mark for Grade A office space, meanwhile at Solent Business Park you can expect to pay £23.50 psf.
Industrial Insights
The first half of 2025 has shown resilience in the South Coast industrial sector despite broader economic uncertainty and evolving occupier behaviour. After the extraordinary growth during the pandemic years, where capital values surged by around 30%, the market is now readjusting to a more normalised level of enquiry and activity.
Across key locations including Southampton, Portsmouth, Bournemouth, Poole, and wider Dorset, demand for modern logistics and light industrial space remains strong. Nevertheless, ongoing supply constraints continue to shape market dynamics, resulting in a complex environment for both occupiers and landlords.
Although enquiry levels have dipped compared to last year, the market is stabilising following the fluctuations caused by macroeconomic factors such as UK and US elections, government fiscal announcements, and inflationary pressures. Decision-making among occupiers has slowed, with many taking longer to commit to deals or opting to delay moves amid uncertainty.
A persistent shortage of industrial stock is influenced heavily by geographical and environmental factors - particularly the sea and South Downs restricting land availability. While some increase in stock availability has come from business failures or downsizing, genuine new-build supply remains limited.
In Bournemouth and Poole, new developments have delivered additional stock, but take-up is gradual as occupiers weigh up their options. The smaller unit market (under 10,000 sq ft) in the Bournemouth, Christchurch, and Poole (BCP) area faces significant challenges, with high costs, business rates, and operational expenses deterring smaller businesses from leasing new premises. Many are choosing to make do with their existing space here.
In the Solent, mid-sized units (3,000–15,000 sq ft) are also experiencing slower demand than in previous years. The high cost and complexity of moving - especially when specialist machinery and fit-out costs are involved - means occupiers often prefer to stay put and modify their existing premises.
Power supply remains a notable constraint for small to mid-sized manufacturing units, as increased demand for electrification and ESG compliance requires significant infrastructure upgrades, taking time and investment to implement.
While more second-hand space may become available later in the year as occupiers reassess their needs post-lease events, this is unlikely to fundamentally rebalance the tight supply-demand equation.
What industrial occupiers want
- Modern industrial units sized 10,000 to 50,000 sq ft with high eaves, ample loading capacity, and strong ESG credentials.
- Last-mile distribution hubs near population centres and key transport routes such as the M27/M3 and A31.
- Freehold purchase opportunities, especially among SMEs looking to control their own premises.
- Flexible, high-quality mid-box units, addressing the ongoing “mid-size squeeze” in available space.
Emerging Sector Demand
Meanwhile, the defence and aerospace sector around Portsmouth and coastal areas continues to grow, with demand for smaller industrial units (3,000 sq ft+) supporting government and tech-related supply chains.
Finally, the healthcare sector is also driving more demand for medium-sized industrial and warehouse space for medical equipment, logistics, and administration functions across the South Coast.
The leisure sector, particularly padel operators, is increasingly leasing larger warehouse units (15,000–20,000 sq ft+) for sports and recreation, leading landlords to be more receptive to these uses.
Planning and Sustainability
Sustainability and energy efficiency will continue to be critical in shaping market supply and demand.
Planning requirements around change of use, particularly for leisure and sports-related occupiers, have created some complexity but landlords and local authorities are becoming more flexible.
ESG and EPC compliance are key factors influencing occupier decisions, with a growing preference for buildings rated EPC B or better. Power availability and infrastructure upgrades, including solar PV and battery storage, are increasingly important considerations for developers and occupiers alike.
Key transactions
Southampton
Location: Salisbury Road, Calmore.
Transaction type: Land disposal
Size: 14.8 acres for 236,806 sq ft industrial unit
Value: Confidential
Buyer: Panattoni and Legal & General Assurance
Seller: McCarthy Investments
Southampton
Location: Quest 271, Unit 3
Transaction type: 10 year lease
Size: 62,000 sq ft
Rent: £14.75
Tenant: CLF Distribution
Landlord: Salmon Property & Royal London
Portsmouth
Location: Port 27, Walton Road
Transaction type: 10 year lease
Size: 27,224 sq ft
Rent: £13.60 psf
Tenant: 2MV Logistics Ltd
Landlord: DTZ Investors
Christchurch
Location: Priory Industrial Park
Transaction type: 10 year lease
Size: 11,921 sq ft
Rent: £10 psf
Tenant: Avon Magnetics
Landlord: Private Owner
Ferndown
Location: Bedrock Park
Transaction type: 10 year lease
Size: 2,756 sq ft
Rent: £15 psf
Tenant: Trade Counter Mate
Landlord: Northwood Urban Logistics
Spotlight on
Availability
Occupier demand across the South Coast industrial market remains healthy, driven by both organic business growth and operational consolidation. However, the supply-demand gap continues to widen, particularly for modern, new-build industrial and logistics space.
Sectors fuelling demand include 3PLs, e-commerce, food and drink, and advanced manufacturing, with many occupiers upgrading to energy-efficient premises to meet stricter ESG and EPC standards.
Developers continue to approach the market cautiously. Planning delays, limited land availability, and rising construction costs - especially in environmentally sensitive areas such as Dorset, are restricting speculative development. As a result, many occupiers are choosing to extend existing leases or refurbish older premises rather than relocate due to high moving costs, while others are pushed to the fringes of traditional industrial hubs to secure space.
Total Sq Ft of Industrial Space Available (sq ft)
Availability rates for prime industrial are now above the five-year average, with more units returning to market as take-up slows.
Much of this stems from lease expiries, strategic relocations, and some signs of business distress, though speculative development remains constrained by viability challenges, build costs, and planning barriers.
In key hubs such as Southampton to Portsmouth, availability totals around 3,932,000 sq ft (8.3%–15.5%), vacancy rates have edged up - driven partly by new development - to 5.6% for logistics and nearly 3% for light industrial (expected to reach 4% by end of 2025).
Despite this, Grade A/high-spec stock (BREEAM Very Good/Excellent, high eaves) remains scarce, limiting options for expanding occupiers. Dorset, Bournemouth and Poole face even tighter supply, with few new-build opportunities and increasing redevelopment pressure on older estates.
Transaction hotspots include Nursling, Eastleigh, and Chandlers Ford around the M3/M27 corridor and near Southampton Airport, where availability and activity are notably stronger.
Several significant speculative schemes have recently completed or are nearing completion:
- Major developments such as at Railway Triangle, Portsmouth will deliver over 100,000 sq ft of modern warehousing due to complete Sept 25.
- Quest 271 in Southampton, a brand-new development brought forward by Salmon Developments and Royal London adjacent to the M271 and port facilities, has achieved record rents of up to £14.75 psf.
- Sonar Portsmouth by Wrenbridge is attracting strong interest and is 30% under offer, offering EPC A-rated modern units.
- Bedrock Park Ferndown, around 180,000 sq ft of multi-sized units are 70% let, with headline rents reaching £15 psf for trade counter space.
Looking ahead, the pipeline includes speculative development at Proxima Park, Waterlooville, with planned 40,000–50,000 sq ft units expected to commence in early Q4, subject to planning. Meanwhile, Panattoni’s new development – T-Park in Southampton – will also deliver much-needed mid-box supply, Investment activity remains strong, exemplified by recent sales such as Chalcroft Industrial Estate and growing interest in well-located, high-spec assets.
Rents
Following several years of strong post-pandemic rental growth, the first half of 2025 has seen a more measured pace across the South Coast industrial property market, marking what many regard as a return to more ‘normal’ rental movement.
Incentives have increased across the board, with landlords offering more flexible terms to secure tenants in a shift from the boom years. The market is transitioning back to a more balanced state, with tenants now expecting better deals and often walking away if terms are not favourable.
Despite this, prime locations continue to see capital growth and strong investor interest. Freehold opportunities remain sought-after by business owners wary of rising rents.
While growth has eased from the highs of 2022–2023, demand for well-located, high-specification industrial units remains resilient. Occupiers have become increasingly cost-conscious, but with inflationary pressures softening, headline rents continue to hold firm, underpinned by limited supply.
Southampton continues to outperform the rest of the South Coast, with prime rents reaching £14.75 psf and trending upwards. Portsmouth and the Bournemouth, Christchurch & Poole (BCP) area remain steady at £13.50 and £12.50 psf respectively.
In Bournemouth itself, rents average around £10.50 psf. For units of 10,000 sq ft or more, we continue to see rental growth owing to strong occupier demand. Meanwhile, smaller units in and around Weymouth are achieving approximately £8.25 psf.
Joe Walker
Head of Lease Advisory, Vail Williams
From pandemic-era leases to post-boom rents
“We’re now at the point where many industrial leases signed in the latter part of 2020 and into 2021 are coming up for rent review or renewal.
“Some occupiers are not alive to the significant rental growth which has been the trend within the industrial rental market over the intervening period, with many mistakenly assuming that rental values might be aligned with UK economic growth and business sentiment.
“However, with sharp increases in rental values in many markets over the preceding five-year period, many tenants could now face significant rental uplifts.
“It is essential that occupiers understand their lease provisions and engage proactively, armed with a realistic understanding of market rents and a creative approach, to explore mutual value-add opportunities with landlords.
“Optimising the cost base will be crucial to occupiers seeking to remain competitive in a challenging business and regulatory environment.”
At Vail Williams, our expert local market knowledge enables us to support occupiers by providing clear, evidence-based market advice, negotiate optimum terms with landlords, and identify broader commercial opportunities, whether in the form of lease restructures, lease extensions or strategic rationalisation. Proactive engagement can make all the difference.
Retail rents and investment yields
Occupier demand in the retail sector has remained strong on the South Coast throughout H1 of 2025, despite the challenges of the wider economy, with retail occupancy in the prime retail pitches remaining positive.
Rents have been rebased and business rates have tended to adjust downwards in line with market levels, which has helped to support market activity here.
There remains a high level of vacancy in the region’s former department stores such as Debenhams and M&S where the concept of repositioning and reimagining such large amounts of retail space is proving challenging.
This is akin to what is being seen nationally, where some 35% of former department stores are still vacant. Interestingly though, we are seeing some exciting repurposing opportunities come through in Southsea, Portsmouth and Bournemouth.
Occupier demand on the high street remains good particularly for the best retail centres such as at West Quay, Southampton and Gunwharf Quays in Portsmouth which have seen recent lettings to Garmin, Mango, New Balance and Omnes.
We are also seeing a good level of retail property demand in cathedral cities such as Winchester and Chichester, and popular market towns like Romsey, Petersfield and Lymington.
Town Centre Retail Property Deals
West Quay, Southampton.
Garmin opening landmark UK store.
West Quay, Southampton.
Mango opening first store on South Coast.
Gunwharf Quays, Portsmouth.
New Balance opening first South Coast store.
Gunwharf Quays, Portsmouth.
Omnes, sustainable fashion brand, opened.
Castlepoint, Bournemouth.
Rituals have opened a new store.
Chichester
Vinegar Hill and Jo Malone have opened stores
Romsey
Waterstones new store.
Petersfield
Gail’s Bakery
Out of Town (OOT) Retail
The out of town (OOT) retail market is similar to the overall picture seen across the UK currently. Occupancy remains very good, with vacancy rates currently very low at about 4%.
At Pompey Centre, Portsmouth, last year B&Q downsized their premises and there were lettings to Aldi, Matalan and Home Bargains, demonstrating that there remains retail demand in the OOT market.
Convenience Stores, Drive-thru and Drive-to.
Activity in the convenience store and drive-thru and drive-to market remains very popular across the South Coast, with active occupiers including McDonald’s, Burger King, Costa Coffee, Starbucks and Greggs – the latter in particular have been very active, with Vail Williams’ agency support. Vail Williams’ investment team is also actively marketing a number of convenience store opportunities.
We are also seeing entry into the market of new US brands including Taco Bell and Wendy’s to name but two. All of these brands together remain very acquisitive.
Town centre repurposing
South Coast town centres are undergoing a transformation, with repurposing of assets at the heart of activity here.
There are two interesting schemes currently underway which demonstrate the overall trend towards a reduction of retail floor space in favour of repurposing space for residential and other uses. The underlying aim is to revitalise our high streets, bringing people back into our towns and cities.
In Southsea, Portsmouth, the former Debenhams department store is being converted for residential use, with commercial units on the ground floor which we have been retained to let. There will also be a GP surgery, veterinary surgery, gym and another unit which remains available to let.
In Bournemouth, the former Beales shopping centre is also being converted to 130 flats with a gym and pool facilities, with some hybrid commercial space in the basement and upper ground floors.
And in Southampton, the Bargate Quarter will see the redevelopment of the former 1980s shopping centre which is already well underway and will see 519 new homes, together with 400,000 sq ft of ground floor commercial space.
At nearby Bitterne, JD Gyms took a 28,000 sq ft former supermarket premises right in the suburban town centre, transforming the use of that space.
This innovative repurposing of stagnant stock shows how town centres are, increasingly, embracing the repurposing of stock in order to breathe new life into the high street, whilst delivering much needed residential supply to market. Indeed, our town centre regeneration team has actively been advising several local authorities across the South Coast on a variety of repurposing or regeneration projects.
