Regional office market report shows below average performance

GVA quarterly review shows subdued start to 2011 but signs for optimism

Article posted: 26 Apr 2011

GVA’s latest quarterly review of the regional office market, ‘A tale of nine cities’, shows a subdued start to 2011 in city centre and out-of-town take up. Combined, the two markets have experienced just 1.25m sq ft, 19% below the quarterly average.

The review, which assesses the take up of office space in Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle, showed that there was above average take up of office space in Bristol and the two Scottish cities.

Despite the low key start to the year, sentiment and current enquiry levels give reasons to look forward to the rest of 2011. The indications are that activity will increase in subsequent quarters and that more professional service activity will re-emerge later this year.

In terms of stimulating activity in the medium term, many 25 year leases that were taken out in the late '80s boom are now reaching an end, and this is driving new take up. Also, the relaxation of planning regulations to convert vacant offices to residential property, announced at the budget, may help to deal with the growing supply of low grade secondary property.

Looking at take up of office space in the nine city centres was 786,000 sq ft, 22% below the quarterly average. Average rental growth forecasts for each city centre show little growth this year and slow growth next year. Headline rents vary between £20 per sq ft for office space in Newcastle and £28.50 per sq ft for office space in Edinburgh.

Take up in the out-of-town markets was 464,000 sq ft, 15% below the quarterly average. Bristol, Birmingham and Edinburgh experienced above average activity. Headline rents for out of town vary from £14 per sq ft for office space in Liverpool and £21 per sq ft in Bristol.

For a copy of 'A tale of nine cities' Q1 2011, please go to www.gva.co.uk/research or contact giles.tebbitts@gva.co.uk.

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Posted by Jo