GVA - The big nine: a quarterly review of the office occupier markets
Recent GVA research has revealed that during the last quarter of 2014, the ‘big nine’ cities have seen a substantial increase in occupied offices; 70% higher than the five-year quarterly average at 1,945,700 sq ft.
This meant that the total take-up for 2014 increased by 5.6 million sq ft and is at its highest since 2008.
Bristol, which had thrice the quarterly average, and Birmingham, which had twice, came out as top performers in Q4. In particular, the Bristol market saw many big deals reach completion.
However, at 1.33 million sq ft, Manchester’s take-up was the highest of the ‘big nine’ (despite the failure of larger ‘pre-let’ requirements to commit to projects scheduled for the end of the year).
Activity from Q4 brought Glasgow’s total take-up for 2014 to beyond the five year average. Edinburgh had the biggest deal of the ‘big nine’ in Q4 through Standard Life Investments at St Andrew Square (108,000 sq ft).
An average 5.8% increase of net effective headline rents occurred in the nine major cities. The report predicts that a progressive increase in headline regional office rental growth during this year and next will be a product of a shortage of grade A space and developing occupier demand.
The take-up out of town markets in Q4 was 28% higher than the five year quarterly average at 927,400 sq ft. Newcastle led the way in the out of town market, gaining the largest deal at Cobalt Business Park of 40,000 sq ft to Siemens. Manchester also secured 270,000 sq ft of deals in the out of town market, while Glasgow, Leeds, Birmingham and Newcastle seized over 100,000 sq ft of deals.
Leeds remained at the forefront of office occupying markets throughout 2014, with its take-up 13% higher than the five year average at 550,000 sq ft. Proposed schemes under construction in the city have drawn much interest, such as the Roydhouse Properties/ M&Gs’ 220,000 sq ft Central Square scheme, which is expected to complete in 2016.
Additional pre-let activity is expected in Leeds due to major forthcoming requirements, including PwC, Sky and Towergate. This activity will govern how other pipeline schemes (such as 173,000 sq ft City Square House and Bruntwood/Kier’s 93,000 sq ft) will develop.