The Big Nine, Quarterly review of the regional office occupier markets - GVA

Report Summary:

Take-up is only 4% down on the quarterly averages so in reality the office market remains relatively healthy. A lack of confidence in what remains a steady market is accentuating a state of continued unease. The reality is that, despite slow progress with deals across the board, transactions are not letting up. Nevertheless take-up in a number of cities going forward will be reduced by the lack of grade A supply and this is already feeding through to headline rents.

City centre and out-of-town take-up in the nine GVA regional office centres recorded take-up of 1,526,000 sq ft in Q4, 4% below the quarterly average.

• The out-of-town market made up 36% of this total, with 549,000 sq ft, 2% below the quarterly average.
• Headline rents have increased in Manchester, Cardiff and Leeds in response to a tightening grade A supply, while rents remain the same as a year ago in the six other cities. Incentives also remain unchanged.

Rents and forecasts:

Sentiment in the regional office markets has declined markedly since the summer. Consequently larger requirements have been slow moving, as companies have delayed decisions and take-up in a number of cities has been dominated by small to medium sized transactions.

Over the last year, headline rents and lease incentives have remained unchanged for six of the nine cities, with Manchester, Leeds and Cardiff seeing an increase in rents since the summer. City centre headline rents vary between £29.50 psf in Manchester and £21 psf in Liverpool. Factoring in rent free periods (less three months fit-out), these figures reduce to net effective rents of £23.51 and £15.23 on a ten year term.

About the Author:

GVA’s award winning Research team provides high quality research and analysis to the business and its clients. Our market commentaries, thought leadership pieces and consultancy advice drive industry debate, distinguish GVA from its competitors, and add value for our clients.