Regional UK Office Market Review, Q2 2011 - The Big Nine

Report Summary:

Regional office market take-up figures have been given a much needed injection with the Admiral deal in Cardiff.

While in general longer term enquiries are thin, there are also some significant deals in the pipeline which we are optimistic will be completed in the second half of the year, including JP Morgan and Morgan Stanley in Glasgow, BSkyB in Newcastle, and Grant Thornton and the Law Society in Birmingham.

Along with the Admiral deal in Cardiff, there is optimism that take-up figures for 2011 will be boosted by deals that are now looking well progressed – BUT in the longer term we are concerned that enquiries are thin. The mix of enquiries is interesting however, with a good increase in grade A requirements in the 12-20,000 sq ft mark – a key ingredient in the regions' mix of take-up historically.

• The city centre and out-of-town office take-up in the nine GVA regional markets totalled 1.59 million sq ft in Q2, similar to the three year quarterly average
• City centre take-up has been enhanced by the granting of planning permission of Admiral Insurance’s 215,000 sq ft building in Cardiff, whereas out-of-town activity was modest
• Grade A supply is continuing to tighten, and this is enabling headline rents to hold firm. This needs to be contrasted with the increasing supply of secondary stock which is weakening average rental growth

Average rental growth forecasts in the regional office markets are less encouraging, showing a decline of 1-2% in most regions and 4% in the North East, West Midlands and Wales. Looking further forward, we expect rents to stabilise next year with growth of around 2.5% from 2013.

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.

Our national office team advises clients on all aspects of office space from development and agency, right through the property life cycle to disposal. We operate across a host of sectors and all regional markets, on single or portfolio projects.

We work with occupiers to help tailor their accommodation to business needs, and with landlords, investors and developers to help maximise returns and profit.

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