Signs of occupier activity recovery in UK regional office markets

Jones Lang LaSalle’s research show take-up activity up 75% in H2 over H1

Article posted: 20 Jan 2011

        According to research published yesterday by Jones Lang LaSalle, signs of recovery in the UK regional office leasing market appeared during the second half of 2010 (H2 2010), with take-up activity up 75% overall (3.5m sq ft) in comparison with the first six months of the year. 

Whilst the uptake in activity was slightly uneven across the six key UK markets outside of London, with offices in Manchester and office space in West London particularly strong, overall this bounce-back meant that 2010 take-up totalled 5.5m sq ft, a 36% increase on 2009, and exceeded the five year annual average by 12%. 

According to JLL the UK regional office leasing market continues to see increasing polarisation between Grade A and Grade B space. Prime space looks set to continue to perform well over the year but secondary stock carries significantly more downside risk. In the short-term it is anticipated that some tenants, who took space in H2 2010, will start to release stock onto the market keeping the supply of lower-quality space inflated. In the longer term, as the public sector cuts start to be implemented JLL forecasts further influxes of Grade B supply onto the market.

In the regional office investment market, activity has remained relatively subdued, as most investors have continued to seek assets in London. Investors in the regional markets were still highly risk averse, focused on good quality, well-let properties and with clear divergence between prime and secondary space.

Manchester’s most significant office space transaction of 2010 was the Co-Operative Group's pre-letting of 328,000 sq ft at Miller Street. Work on the £100m building was started by lead contractor BAM Construction in July last year.

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Posted by Janet