DEMAND for quality business and industrial space along the M27 corridor around Southampton and through to south-east Dorset is likely to remain strong in 2003, says property consultant Vail Williams.

Unlike other areas of southern England, which were affected by the IT boom of the late 1990s, supply and demand of offices and industrial units has remained in balance, reports Irene Spencer, partner at Vail Williams in Southampton.

"The regional economy is diverse and has coped well with changes in national and world markets," she said.

"In addition to forward-looking management, the universities have helped create companies that have grown through their research and development expertise. Also, businesses with links to the armed forces are doing well."

According to Vail Williams, the M27 corridor, especially around Fareham and Southampton's city centre, has been a strong performer in 2002 with a number of significant deals in the office market.

It has not been as active in the middle and lower end markets.

"High quality office space has been in particular demand this year in Southampton city centre and at Botleigh Grange business park, Hedge End," she said. "But the market has not been so active in the middle and lower end markets and this has created a slowdown in overall take-up of space."

The reason for the apparent slow-down is a lack of quality space.

"Highland Developments has been one developer with the confidence to build out schemes," she commented. "They have been rewarded with high-profile lettings at both Link 414 and Botleigh Grange to quality tenants such as B&Q and Vosper Thornycroft. Other developers need to follow suit."

Highland Developments is now preparing site work at its 5,850 sq m (63,000 sq ft) Centris office scheme at Leigh Road, Eastleigh.