Regional office occupier markets outside of London and the South East have proven relatively resilient in 2016, despite the timing of the UK’s referendum on membership of the EU. Latest analysis from CBRE shows that demand for office space across the UK totalled 5.6 million sq ft, a small 7% decrease from the 2015 total of 6 million sq ft and just 3% below the 5 year average. Take-up activity in the second half of the year, following the EU Referendum result was only 3% lower than the first half of the year.

These headline figures obscure a mixed pattern of take-up across the UK. Some cities have fared better than others relative to recent past performance. Bristol was a particular stand-out market, with occupier activity up by nearly 60% from the previous year. This market was boosted by a pre-letting of 107,000 sq ft at 3 Glass Wharf to HMRC as part of the Government’s regional hub programme. Other cities with improved levels of take-up in 2016 include Glasgow and Liverpool. Manchester, whilst not quite beating its 2015 level still achieved strongly, outperforming its 5 year average by 16%. Q4 was a stand-out quarter in this market, recording a total of 621,000 sq ft, the highest level of office space take-up since 2010. The largest deal in this market at the end of the year was to Swinton Insurance who took 165,000 sq ft at 101 Embankment.

In contrast take-up in cities such as Leeds and Edinburgh has struggled to keep up with the very successful years these cities have seen since 2013, whilst Birmingham, although 28% down from 2015, was only marginally below its 5 year average. Leasing volumes in Aberdeen remain subdued by the low oil price.

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.

 Emma Jackson, Associate Director of Research for National Office Markets
Occupier data for the full year, on the face of it indicates that concerns about the EU referendum result do not appear to have unduly deterred occupiers from continuing their searches for new space. However, 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.
Emma Jackson, Associate Director of Research for National Office Markets