Office take-up drops across big six cities

Letting activity in the UK’s major regional office markets was predictably subdued in 2020 but enduring appetite for best-in-class space helped to support and bolster headline rents, new figures from Radius Data Exchange reveal. Coronavirus restrictions put a straightjacket on agents’ ability to get deals in-train after a resoundingly positive opening quarter. Combined take-up across Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester totalled just over 3m sq ft – a 36.8% fall in comparison to last year’s regional activity and a similar drop on the five-year average. Edinburgh managed to buck the wider trend with a 13.3% increase on last year’s total – achieved largely thanks to Baillie Gifford’s 280,000 sq ft pre-let at Haymarket Edinburgh (pictured). However, even this uptick in annual activity was not enough to push the city above its five-year average. Even the regional cities which saw the greatest drop-off in leasing activity did not experience as big a fall as London, where Radius figures indicated a 60% year-on-year decline in take-up, and a similar drop on the long-term average. The data offered some encouraging evidence that, even as working patterns change, businesses still place significant value on having formal office spaces as part of their location strategy – even if the amount of space reduces. Headline rents in five of the six cities rose in comparison over the course of 2020. The average lease length on newly signed deals for core office space also increased, with Edinburgh, Leeds and Manchester all seeing lease lengths extend year-over-year. Occupiers appear eager to obtain the best space possible – and will pay a premium to secure it ahead of anyone else. Supply rates in all six regional cities moved sharply outwards during 2020 as take-up slumped, raising the question of whether this is space that can offer something to tenants as the nation recovers economically, or if it is simply stock that is sliding towards obsolescence faster than it might otherwise have done. To send feedback, e-mail graham.shone@egi.co.uk or tweet @GShoneEG or @estatesgazette