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New speculative starts in Bristol, Glasgow, Leeds and the Western Corridor fuel confidence
Edinburgh, 30 July 2013 - Edinburgh, 30 July 2013 – Activity in the UK’s key regional office property markets strengthened significantly in the first half of 2013 (H1), with office take-up volumes of 3.4 million sq ft, up 43% compared to the equivalent period last year. According to Jones Lang LaSalle’s research leasing volumes were 38% above the five year average for H1, and are just 39% behind the full year total for 2012. It is anticipated take-up in 2013 will exceed the previous year’s total.
Cameron Stott, Director of Jones Lang LaSalle’s agency team in Edinburgh, said: “Leasing activity in the key regional office markets were boosted by an increase in both the volume and number of larger deals. In the first half of 2013, the volume of deals over 10,000 sq ft increased by 62% compared to a year earlier, totalling more than 2.0 million sq ft.”
Outside of the South East, Leeds and Manchester were the strongest regional performers in the first half of the year recording take-up of 438,000 sq ft and 466,000 sq ft respectively. Combined, both markets accounted for almost half of all take-up within the Big Six markets.
Overall, office supply across the key regional markets fell by 6% compared to a year earlier, with current availability estimated at 24.8 million sq ft. Overall vacancy rates currently stand at 12.0%, down from 12.7% in Q2 2012 but still above the 10 year average of 10.7%. There are however considerable variations across the markets with vacancy rates as high as 20.3% in the Thames Valley.
Jones Lang LaSalle points to continuing signs of confidence returning to the market with new speculative starts in Bristol, Glasgow, Leeds and the Western Corridor in the first half of 2013. Of the 2.1 million sq ft of space currently under construction across the major regional markets, 1.8 million sq ft is due to be delivered speculatively. The majority of this (70%) is not due to complete until 2014/15 with the result that Grade A supply is expected to continue to tighten over the short term.
The current pressure on Grade A supply is expected to drive limited prime rental growth. Across most of the Big Six markets prime rents were stable over the second quarter, although rents in Edinburgh increased to £29.00 per sq ft for the best space. Incentives remain broadly tenant favourable, although Jones Lang LaSalle expects these to move inwards as Grade A supply continues to fall.
Notes to Editors:
• The UK’s regional office markets monitored are Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Manchester, & Western Corridor
• The Big Six UK office markets are: Birmingham, Bristol, Leeds, Manchester, Edinburgh and Glasgow.
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