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News Release


Upward rental growth curve continues across Core 8 regional office markets

2015 total office take-up will surpass last year’s levels according to JLL 

London, 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. 

Jeremy 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.”

According to JLL’s 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.

The 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. 

JLL’s 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. 

Jeremy Richards added: “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).”

Office 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 months. 

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.

“We 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.