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2015 total office take-up will surpass last year’s levels according to JLL
4th September 2015
- Growth in prime headline office rents has continued across the UK’s regional
property markets with an average increase of 4.3% across the Core 8* markets
over the past year (to June 2015) according to property consultants JLL.
Reflecting the solid outlook for demand and tight supply of new space, headline
rents are expected to continue on an upward curve with average growth of 2.9%
per year in the Core 8 regional markets over the period 2015-19.
Richards, Head of National Office Agency at JLL, said: “Sustained levels of
occupier demand combined with the decreasing availability of Grade A office
supply has contributed to healthy rental growth with year-on-year increases
witnessed in all bar one of the Core 8 cities. Manchester and Leeds saw
the most significant increases – rents jumped by 6.5% year-on-year to £33 per
sq ft and by 6% year-on-year to £26.50 per sq ft respectively.”
research report office take-up across the Core 8 regional markets reached
3.8 million sq ft in H1 2015 and is forecast to exceed last year’s full year
total of 7.3 million sq ft, well ahead of the 10-year average of 6.6 million sq
ft. Manchester and Birmingham dominated H1 activity, accounting for 677,000
sq ft (18%) and 650,000 sq ft (17%) of take-up respectively.
falling supply of good quality office space remains a key theme according to
JLL. Available office space across the Core 8 markets stands at 19.5
million sq ft with an average overall vacancy rate of 8.2%, down from 9.1% over
the year. The Grade A vacancy rate is just 2.4% on average, with Leeds
and Cardiff the lowest at 1.5% and 1.3% respectively.
report shows that total pre-leasing jumped sharply in H1 to 837,000 sq ft
across 14 transactions in comparison to 138,000 sq ft across five deals in the
whole of 2014. 5.36 million sq ft is currently under construction
speculatively across the Core 8 in 58 schemes, which compares to just 3.3
million sq ft in H1 2014.
“Partly aided by pre-lets, the development pipeline is now responding to the
supply issue with Manchester accounting for the greatest volume of speculative
development activity (875,000 sq ft).”
investment volumes across the Core 8 hit £1.9 billion in H1 2015, well up on
the £1.5 billion traded in H1 2014. Domestic investors accounted 74% of
investment volumes with the weight of money targeting the regions continuing to
place inward pressure on prime yields, which now range between 5.00-5.25% for
the largest regional cities, down 25-50 basis points over the past 12
Chris Ireland, Chairman and Lead Director UK
Capital Markets at JLL,
added: “H1 2014 saw a continuation of the strong investor demand for regional
offices that characterised 2014. The Western Corridor market has been
most active with £936 million traded, followed by Manchester and Birmingham
with £245 million and £223 million respectively.
have continued to see yield compression in the main Core 8 markets. Edinburgh
and Glasgow have notably seen yield compression following a period of reduced
trading and yields in these markets have stabilised at a discount to the prime
yields in the major English cities.”
Notes to Editors:
The Core 8* office markets monitored by JLL are: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Manchester and Western Corridor.
Lead Director - South West & Wales
+44 (0)117 930 5745
Chairman & Lead Director - Capital Markets
Head of UK Regional Marketing & Communications
+44 (0)161 828 6407