The UK office market outlook H1 2019
Another strong six months were recorded in the Core 8 leasing market, with 3.85 million sq ft let in H1. This was virtually on a par with the same point in 2018, when the strongest H1 on record totalled 3.87 million sq ft let.
Economic performance has been mixed so far to date, as Brexit uncertainty impacts on business and consumer demand.
Another strong six months were recorded in the Core 8 leasing market, with 3.85 million sq ft let in H1. Manchester returned another robust performance with over 813,000 sq ft leased while Birmingham and Leeds recorded the biggest year on year increase with H1 2019 being 63% and 30% above H1 2018 volumes. In the first six months of the year, over 600,000 sq ft (23%) was let to the flexible workplace sector, which is already more than the total volume let throughout the whole of 2018.
Supply fell across the Big 6 to an unprecedented low level, with the vacancy rate now averaging just 4.6%. This pressure on supply is more acute for Grade A, with the vacancy rate falling below 1.5% for the first time ever. This fall in Grade A space was in part driven by the low levels of speculative new supply completed in the year to date combined with robust leasing.
Tight supply and positive occupier demand supported rents across the Core 8 during H1, with rental growth of 1.0% seen between end Q4 2018 and Q2 2019. The outlook for the remainder of the year is for further rental growth, as supply shortages are likely to continue with much of the speculative space being developed likely to be let before completion.
Read more in the H1 2019 UK office market outlook report.