Demand for office space across the UK is at its highest level since 2008, according to the latest analysis from commercial property consultants CBRE.
The firm’s report reveals that take-up levels have been boosted by both a number of larger floorplate transactions across the country and an increase in the number of smaller floorplate deals favoured by small and medium sized enterprises (SMEs).
Philip Morton, Head of Office Agency & Development at CBRE Bristol, said: “The resumption of a more sustained period of economic growth, and a renewal of business confidence, has translated to a clear upturn in leasing activity during 2013.
“In Bristol the situation is changing; we have had over 700,000 sq ft of old, redundant offices that have obtained permitted residential use over the last six months. This has changed the dynamics of the city and should lead to pressure being put on those buildings that are fit for purpose.”
Andrew Marston, CBRE’s Director of Research for National Office Markets commented: “Occupier data for the second half of the year has demonstrated that business confidence within the UK’s largest cities is gradually improving. The risks that prevented many businesses from committing to acquiring new office space over recent years have now eased, and that situation is increasingly being reflected in enquiries and done deals.”
The stronger demand that has characterised 2013 has also led to the first meaningful reduction in overall supply levels since vacancies peaked in 2009. Meanwhile, secondhand space still dominates supply across the country, although conversion of some obsolete office properties to other uses (including residential through the new permitted development rights) has aided in the process of reducing this oversupply position.
Philip Morton added: “Choice is increasingly limited for new build Grade A space and Bristol is one of only a handful of UK cities with major new speculative developments under construction. The lack of supply at the prime end of the market is therefore expected to lead to upward pressure on rents, which we expect to see across many regional city markets in 2014.”
