Sentiment in the regional office markets has declined markedly since the summer according to GVA’s latest edition of The Big Nine – the quarterly regional office market review.
Consequently larger requirements have been slow moving, as companies have delayed decisions and take-up in a number of cities has been dominated by small to medium sized transactions.
However according to Carl Potter, Director and head of National Offices, based in GVA’s Birmingham office, low sentiment doesn’t reflect reality.
“Take-up is only four per cent down on the quarterly averages, so the office market actually remains relatively healthy. This poor sentiment doesn’t actually mirror the reality of what’s happening in the market.”
He continues: “A lack of confidence in what remains a steady market is accentuating a state of continued unease. The reality is that, despite slow progress with deals across the board, transactions are not letting up.
“Nevertheless a number of cities are in the position where take-up going forward is going to be reduced as a consequence of the lack of future supply. This is already feeding through to headline rent increases in Manchester, Cardiff and Leeds. However, in Birmingham, as a consequence of significant development completions during 2008/9, the city does have good opportunities to accommodate footloose companies into high quality accommodation. The forecasted increases in Birmingham’s population and demographic betterment will also assist the city in attracting at least its fair share of inward investment.”
The Big Nine report, which reviews Q4 of 2011, highlights how city centre and out-of-town take-up in the nine GVA regional office centres recorded take-up of 1,526,000 sq ft. The out of town market made up 36 per cent of this total, with 549,000 sq ft. The former was four per cent down on the quarterly average with the latter two per cent down.
Tightening grade A supply has increased headline rents in Manchester, Cardiff and Leeds, while rents remain the same as a year ago in Glasgow, Edinburgh, Newcastle, Liverpool, Birmingham and Bristol. Incentives also remain unchanged.
Carl Potter adds: “There is a wide range of availability still in the market, with a years supply of grade A space based on average grade A take up. This means that some cities are faring much better than others.”
For further information on GVA’s latest Big Nine report visit www.gva.co.uk/research
