OFFICE SPACE TAKE-UP IN THE UK ‘BIG 6’ CITIES ON COURSE TO SMASH 5-YEAR ANNUAL AVERAGE
The UK regional office markets have continued to build upon 2014’s growth, with the volume of office space taken in the UK’s ‘Big 6’ regional cities in Q3 2015 totalling 939,000 sq ft, just 7% below the level recorded at the same time last year. Over a longer time frame, combined take-up over the first nine months of 2015 totalled 3.5 million sq ft, which is 5% higher than the same period one year ago. As a result, the grand total for 2015 is likely reach if not surpass last year’s total, and well on target to exceed the five year annual average level of 4.0 million sq ft.
In many of the core regional cities, pre-letting has returned in strength, with professional service firms in particular taking advantage of the new generation of office buildings that are about to emerge in cities such as Manchester, Leeds and Birmingham. Recent examples include NCC Group’s pre-let of 60,126 sq ft at the XYZ Building in Manchester and HSBC’s much documented relocation of its UK retail banking HQ to its 212,000 sq ft offices at 2 Arena Central, Birmingham.
The leading cities in terms of year-to-date take-up are Manchester, Birmingham and Edinburgh, with the Manchester take-up volume already well ahead of the five year annual average and only 28% below the total level recorded for 2014. Birmingham take-up in the first nine months of 2015 totalled 710,810 sq ft, which has already surpassed the total volume reached in 2014 and is ahead of the ten year annual average.
Given the volume of leasing we have seen in the first nine months, we firmly expect 2015 to smash the five year annual average, and to be the strongest year of the recovery to date. This level of demand continues to place upward pressure on rental levels and we expect to see this to continue into 2016.