Take-up in the Thames Valley increased for the first time since the second half of 2000, with total lettings of 1.33 million sf during the first half of 2003, up 9% on the same period last year. Demand is primarily from occupiers taking advantage of depressed rents and attractive incentive packages--including rent free periods of up to 21 months on a 10 year lease--to upgrade their existing accommodation.

But the Thames Valley vacancy rate remains relatively high at 14%. Total availability increased by just 11% during the six months, compared with increases of over 30% in both halves of 2001. This reflects a virtual halt in development activity with developers unwilling to start schemes in the absence of pre-lets.

CBRE calculates that average rental values fell by 6.8% over the last year across the region as a whole, with the Thames Valley experiencing the sharpest decline at 9.2%. Senior Director James Brounger said: "We expect tenant demand and take-up to increase during the early part of 2004 in the wake of a US-led acceleration in global economic activity and a bounce-back in business confidence."