Regional office take up in 2015 is 20 percent above the five year average ⁰

The UK’s regional commercial property market has continued to improve on last year’s record levels of occupational take-up, with 9.6 million sq ft transacted in the Big Nine city centre and out-of-town markets during 2015, 20 percent above the five year average. According to Bilfinger GVA’s quarterly review of the regional office occupier markets this is the fourth consecutive annual increase in take-up and compares to an average of 6.6 million sq ft during the downturn years of 2009 to 2012. Take-up over the year was well above average in Birmingham and Manchester in both the city centre and out-of-town markets. Other markets where activity was well above average include Cardiff and Leeds city centres and the suburbs of Glasgow and Edinburgh. Fourth quarter take-up was dominated by above average activity in most city centres and a number of large deals in Edinburgh out-of-town.

The stand out letting was in Cardiff: 150,000 sq ft to BBC Wales, following Legal and General’s £400m backing for the Central Square Scheme. The 135,000 sq ft first phase will soon complete, as will JR Smart’s 80,000 sq ft 2 Capital Quarter. The key letting in Manchester this quarter was 56,000 sq ft to Addleshaw Goddard at One St Peter’s Square, bringing annual city centre take-up to 1.3 million sq ft, close to record levels.

In Glasgow Q4 has seen key deals on all three speculative schemes that completed last year. These include 39,000 sq ft to KPMG and 17,700 sq ft to Whyte and MacKay at St Vincent Plaza. CMS has taken 21,000 sq ft at 1 West Regent Street and DWF 17,000 sq ft at 110 Queen street.

The largest deals in Leeds were two lettings of 60,500 sq ft and 36,500 sq ft to SKY at Allied London’s Leeds Dock. Of the four schemes (totalling 450,000 sq ft) in the city centre due to complete this year, almost a third of the space is now let. A number of refurbishments are underway, looking to satisfy the large number of requirements in the city.

The key story in Edinburgh is the deals at Lochside View, Edinburgh Park; two freehold purchases totalling 85,000 sq ft to JP Morgan Chase and a 31,000 sq ft letting to HSBC. In town there have been a number of lettings at Telereal Trillium’s Argyle House, including the largest in the city, 57,000 sq ft to the University of Edinburgh and 14,000 sq ft to Codebase.

In the Bristol market EDF Energy is close to agreeing a 81,000 sq ft deal at Bridgwater House, while the key deal in the Newcastle city centre market in Q4 was 22,500 sq ft to Ernst & Young at One City Gate East, taking annual activity 20% above average. The healthy level of demand in Liverpool continues with over 100,000 sq ft let during Q4, including 11,100 sq ft to Mann Island Finance and 11,800 sq ft to Inenco at the Corn Exchange. The New Year has brought an increase in the number of requirements across all grades of accommodation.

Among all the regional markets, take-up for 2015 was at a similar level to 2014, but the big issue in the next few years that needs to be addressed is the lack of Grade A supply. Supply of prime space remains tight across the nine cities with an average of just under a years’ current grade A availability, based on past take-up rates.

Click to view the Q4 Big Nine report.