Record activity in the UK's Big 6 office markets last year
The UK’s ‘Big 6’ office markets - Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester – saw a record year of combined take-up last year, transacting 5.6 million sq ft of space, 20% higher than 2016 according to JLL.
The UK's 'Big 6' office markets - Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester - saw a record year of combined take-up last year, transacting 5.6 million sq ft of space, 20% higher than 2016 according to JLL.
Four cities transacted over one million sq ft of office space - Birmingham, Edinburgh, Leeds and Manchester. Manchester saw 1.2 million sq ft taken up, the highest among the six regional cities in 2017, which accounted for 22% of overall Big 6 volumes. Leeds saw the biggest occupier deal outside of London with the GPU's acquisition of 380,000 sq ft at MEPC's Wellington Place.
Vicky Heath, Associate Director in JLL's UK Research team, said: "While some commentators might point to the Government's hub programme as skewing 2017 office take-up figures, when the GPU deals in Birmingham, Edinburgh and Leeds are taken out of the figures, take-up was still 4.8 million sq ft last year. This is 14% above the 10-year average and enforces the underlying strength of the Big 6 markets."
"The Big 6 office markets kept pace with London last year. Once again more office space was transacted in the Big 6 than in London's West End and the Western Corridor region. Big 6 take-up was at a broadly similar level to the City of London too."
The Big 6 office markets continued to benefit from a broad range of occupier activity last year with the public sector making up the highest amount of take-up at 29%. This was followed by service industries (which includes business services, serviced office operators, retail and leisure, transport and travel) with 22% and professional services accounting for 17%.
Across the Big 6 cities, there is a total of 2.2 million sq ft of office space under construction. Of this total, 1.2 million sq ft is due to complete in 2018, of which close to half is in Manchester, with a further 910,500 sq ft anticipated in 2019. This falls well short of the expected level of demand for new office space, with average Grade A take-up across the Big 6 of circa 1.8 million sq ft. The trend for new space to be pre-let ahead of completion means that the regional office markets will continue to see very tight supply for the foreseeable future.
Barrie David, Associate Director in JLL's UK Research team continued: "Last year there were 17 pre-lets, the highest on record, with five of the Big 6 cities witnessing at least two each. As a result of the supply gap, office pre-lets will inevitably continue to keep pace with demand."
Reflecting rising build costs and limited appetite for risk, the refurbishment of existing office space has become more prevalent. Major refurbishments now account for a greater share of office development than ever before, rising from 16% in 2007 to 85% in 2017.