Higher education office leasing booms to decade high

Higher education occupiers cemented their presence in the office leasing market by taking a total of 650,000 sq ft across the UK’s key regional cities – the highest since at least 2013. This was up by 19.5% year-on-year and 55.9% above the 10-year average, according to research by BNP Paribas Real Estate, which found these were also the highest since the company began keeping records in 2013. The research also found that demand was been particularly strong in the regional Big Ten markets, where higher education leasing activity hit around 500,000 sq ft – 9.5% of total office take-up last year, which is their highest share on record. The most active regional market of the year was Birmingham, where higher education institutions accounted for more than half of all regional higher education office take-up, clocking in a total of 315,000 sq ft. BNP PRE attributes this to big deals by Aston University, which took 189,000 sq ft at 10 Woodcock Street, and University College Birmingham, which took 45,000 sq ft of space at Baskerville House on Centenary Square. London accounted for around 150,000 sq ft of the sector’s office take-up, with demand growing in areas with strong supply and competitive rental values, such as Canary Wharf and Stratford. In January, UCL School of Management expanded its presence at Canary Wharf Group’s One Canada Square, E14, by roughly 44,544 sq ft, at a rent of £60 per sq ft – a discount from the average grade-A rents of roughly £70 per sq ft occupiers are paying in the City, according to Savills’ Central London Office Market Watch report. The report from BNP PRE, however, says higher education occupiers are also well-placed to repurpose existing grade-B stock, which it says accounts for over two-thirds of available space in major UK cities. Ben Thomson, head of central London tenant representation at BNP PRE, said: “We’re seeing growing demand from universities seeking to establish a London presence, particularly in emerging hubs such as Canary Wharf and Stratford. In Canary Wharf alone, 19% of office take-up between 2022 and 2024 was accounted for by education services, highlighting the sector’s increasing influence on the capital’s leasing landscape.” The BNP PRE report points to the growth of satellite campuses as one of the causes of the sector’s space-hungry streak.  It found that, among a sample of 10 universities, non-EU international enrolment rose by nearly 60% in the three years after the opening of a London campus – much faster than the 17.4% UK-wide average during the same period. Josh Arnold, associate director in regional office markets research at BNP PRE said: “As the higher education sector continues to face headwinds, driven by inflationary pressures, Brexit, and the tuition fee freeze, we are seeing that many institutions have responded by outlining varying strategies to overcome these obstacles, which, for some, has included strategic growth plans.” This is then further amplified by the growth of demand for UK higher education, with UCAS applications crossing the 600,000 mark in January 2025 thanks to record application levels from China and the US – up by 8.9% and 11.7%, respectively. Arnold added: “The higher education sector’s increasing footprint in the office market is helping to transform city centres. With significant levels of vacant grade-B office space, universities are capitalising on the opportunity to expand their estates efficiently, while reinforcing their presence in key urban locations. This is not only enhancing the vibrancy of city centres but also supporting economic activity by driving footfall and demand for local services.”