Confidence is returning to Oxford's commercial property market, according to a new report.

The report, produced by property consultancy Vail Williams, found a positive shift in office market sentiment across the Thames Valley, Oxford, and Surrey.

However, it also identified a persistent lack of new industrial supply as a major concern for the commercial market.

David Barden, regional managing partner for Vail Williams in the Thames Valley, said: "A new government has brought with it a fresh perspective and we are already seeing the positive impact of this on the office and industrial markets.

"Stabilised interest rates have invigorated the property market.

"Offices have regained their importance as hybrid work solidifies, and the creative repurposing of secondary office buildings is bridging the gap in industrial land and residential demand."

The report also highlighted the influence of hybrid working on the office market, with occupiers committing to this model contributing to a rise in office transactions.

The shift towards quality has seen most super-prime and Grade A+ stock attract early adopters of a return to the workplace.

Despite this, office supply in the Thames Valley and Surrey remains static due to a lack of new developments.

The report also noted a limited supply of Grade A stock across the board, especially in Surrey, despite demand from occupiers.

Although there are high headline rents for super-prime stock, the office rental market is generally under priced, the report said, with rents having decreased in real terms.

Rents remain high in Oxford, with Woking and Guildford also showing competitive, albeit rising, rates.

The industrial market continues to hold promise across the Thames Valley, Oxford, and Surrey.

New developments in Didcot, Slough, Uxbridge, and Thatcham are driving rental growth, with good prospects for further increases compared to other locations, the report said.

Life sciences and tech/data centres are the sectors driving rental increases through occupier demand.

In Oxford, rent on a converted out-of-town unit tripled from £17 per square foot for retail to £65 per square foot for the resulting lab space.

Mr Barden added: “A lack of industrial supply remains a core issue across the Thames Valley and Surrey regions, but deals are still being done here and we are welcoming some quality schemes to market with open arms.

“Landlords and investors are identifying the right microclimate in which to invest to deliver the right product to meet tenant requirements, while also delivering a good return on investment.

"And developers are starting to see improvements in viability for their schemes.

“Overall, this is a moment to harness change, turn potential hurdles into stepping stones, and shape a more dynamic and resilient future.”