Regional offices resilient with over 2m sq ft of take-up
The UK’s largest office markets outside of the capital started the year on stable footing, matching the 10-year average for the quarter at 2.1m sq ft.
Across the nine cities – Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle – prime rental growth rose by 2% to £39.53 per sq ft, according to Avison Young.
Glasgow and Leeds saw the biggest jump in rents, with rises of 5.1% and 6.3% to £41.50 and £42.50, respectively.
The UK’s largest office markets outside of the capital started the year on stable footing, matching the 10-year average for the quarter at 2.1m sq ft.
Across the nine cities – Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle – prime rental growth rose by 2% to £39.53 per sq ft, according to Avison Young.
Glasgow and Leeds saw the biggest jump in rents, with rises of 5.1% and 6.3% to £41.50 and £42.50, respectively.
Bristol, however, still holds the highest headline rent at £48 per sq ft, with Manchester just behind at £45 per sq ft.
Newcastle saw the largest deal of the quarter, a 170,000 sq ft pre-let from the Department for Work and Pensions at Reuben Brothers’ Pilgrim Place development (pictured).
Network Rail also completed a 109,000 sq ft owner-occupier deal at Princes Exchange in Leeds. Those two deals contributed to the government and services industry accounting for a quarter of all take-up over the start of the year, the largest proportion of any sector.
Other notable deals included Auto Trader’s pre-let of 130,000 sq ft at 3 Circle Square in Manchester and EDF signing for 78,284 sq ft at CEG’s 1000 Aztec West in Bristol.
Avison Young found demand on the rise, with nearly half of developments set to complete this year already pre-let. Edinburgh, Glasgow, Leeds and Liverpool face a severely constrained development pipeline completing this year.
The average rent-free period is beginning to decrease, falling from 21 months last year to 19 months now on a standard 10-year lease.
This, the agency said, suggests that demand for space in regional markets is increasing, as landlords no longer need to offer rent-free incentives to secure tenants.
Paul Broad, managing director of Avison Young’s national offices team, said: “It’s encouraging to see that regional office markets are holding steady, showcasing stability and resilience in what is otherwise a turbulent economic outlook. There is a clear shift towards quality space, with occupiers seeking well-located offices, fitted out with sustainability in mind, with almost half of new developments already pre-let.
He added: “We can really see confidence returning to the regional office markets, and we expect this to continue into Q2 and beyond.”
Image © Ryder Architecture
