Jeremy Bates, national head of agency at Savills, talks about trends in the UK office market including the return of speculative development, the impact of London’s success on the regions, which sectors are driving the market and the on-going topic of out of town v’s in town.
Will we see speculative development in the regions
Speculative development will occur first, in the
Thames Valley, Manchester, Cambridge, Edinburgh, Glasgow and London
submarkets prompted by the prospect for rental growth and a shortage of supply.
Will London’s attraction continue to threaten the rest of the south east (and further afield)?
Long-term infrastructure improvements will increase the appeal of the South East and other regions as Central London continues to price out occupiers.
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Savills World Research UK Commercial
Spotlight
Manchester Offi ce Market
March 2013
SUMMARY
■ Helped by a strong fourth quarter, 2012 take-up ended the year at 780,850 sq ft, a 16% increase on 2011. We expect 2013 to reach similar levels.
■ Grade A take-up remained below average in 2012, however, with a rise in Grade A leasing activity in the fi nal quiarter of the year, this might well be the fi rst sign of spring in the Manchester offi ce market.
■ Grade A availability, is now signifi cantly under pressure, with only 33% of the currently available space being of Grade A quality.
■ The fi nal quarter of 2012 saw a reconfi rmation that the top acheivable rent in Manchester remains at £30/ sq ft. This was achieved on an expansion-driven letting at DEKA's Belvedere.
■ Prime yields have remained stable at 6.25% for the whole of last year, and with prime London offi ce yields continuing to harden Manchester is increasingly becoming an attractive proposition for UK and international buyers.
“The fi nal quarter of 2012 saw a rise in Grade A leasing activity to 18% of the total. This might well be the fi rst sign of spring in the Manchester offi ce market.”