BUSINESS AS USUAL FOR OCCUPIERS IN REGIONAL OFFICE MARKETS IN FIRST 3 MONTHS FOLLOWING THE EU REFERENDUM
Regional office occupier markets in the first nine months of 2016 have proven relatively resilient, despite the timing of the UK’s referendum membership of the EU. Across the nine regional city markets monitored by CBRE, overall take-up in the first nine months of 2016 was just under 3.8 million sq ft. This is 10% lower than the 4.2m sq ft taken in the same period of 2015, but only 1.5% under the 5 year average from the first nine months of the last five years.
These headline figures obscure a more varied pattern of take-up across the UK. Some cities have fared better than others relative to recent past performance. Cities with improved levels of take-up this year, when compared to 2015, include Bristol, Glasgow, Liverpool and Southampton. Against each city’s Q1 to Q3 five year average the same cities have all outperformed but Birmingham is also added to the mix. In contrast take-up in cities such as Leeds and Manchester has struggled to keep up with the very successful years these cities have seen since 2013 and leasing volumes in Aberdeen remain subdued by the low oil price. Edinburgh, meanwhile, is almost bang on trend with its five year average.
This is the first full quarter’s occupational activity since the EU referendum at the very end of the second quarter. Concerns above the referendum itself, ahead of the vote, do not appear to have unduly deterred occupiers from continuing their searches for new space. Quarter 3 overall regional occupational activity was only 6% lower than Q2. For many occupiers, their searches have been initiated due to a forthcoming lease break or expiry so referendum concerns will play little part in their decision relating to office moves.
Requirements continue to circulate, so it still remains to be seen the extent to which the Brexit vote will dampen down occupier demand in the regions. However many markets will welcome the timing of the Government Property Unit, who have launched a search for a number of hubs in different UK cities, all of which are very large compared to the typical requirements that drive the regional cities.