Regional occupier activity reaches two-year peak

Occupier confidence across the Big Nine office markets has reached its highest level since the pandemic started, according to the latest figures from Avison Young. Take-up amounted to 2.3m sq ft in Q3 – 11% up on the 10-year average.  The report, which covers Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle, shows a strong performance from out-of-town locations, which accounted for 45% of all take-up. This amounts to some 1m sq ft of deals – the strongest quarter for more than three years.  Demand for grade-A, best-in-class office space was robust, with some 85% of all take-up in Birmingham being for grade-A offices. Availability across the Big Nine city centres increased from a cyclical low of 8.1m sq ft in Q1 2020, to 11.6m sq ft over the course of the pandemic. A further 5.1m sq ft of space is under construction, of which 2.3m sq ft remains available. The demand for quality space pushed up rents across the regional cities during Q3, reaching an average of £32.61 per sq ft – a 2.5% uplift over the past 12 months. Confidence in the regional office investment market also remains strong, according to Avison Young’s report. Total investment volumes during Q3 amounted to £753m, 26% up on the ten-year average of £599m. Figures were skewed, however, by Regional REIT’s acquisition of a portfolio from Squarestone Growth for £236m. The largest single asset deal of the year was the 320,000-sq ft 3-4 Piccadilly Place in Manchester, purchased by Longmead Capital for £143m. Prime yields for most cities stayed the same over the quarter at an average of 5.33%, which compares with 5.31% 12 months ago. According to MSCI, average equivalent yields for all regional offices have moved from 7.69% in June to 7.44% in September. A year ago, regional office yields stood at 7.30%. Mark Williams, principal and managing director of regional investment at Avison Young, said: “There continues to be a considerable weight of money looking to invest in the regional office market, and Q4 is expected to be the strongest quarter of the year, particularly given the slow start we had to 2021.” Use our dynamic tables to discover which agents are transacting the most space in each of the Big Nine regional cities >>  To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews