Demand for high quality office accommodation across the East Midlands continues to rise, according to new research from national commercial property consultancy Lambert Smith Hampton (LSH).
According to The National Office Market Report 2015 was an outstanding year for the UK office market, with the Midlands region among the best performing.
Take-up across the six Midlands markets was at its highest since 2000, a trend that is set to continue throughout 2016.
Nottingham and Derby saw an increase in activity in 2015, and while activity in Leicester was down slightly on 2014 due to a lack of Grade A supply, it was nevertheless up on the 10-year average. The acquisition of St George’s Central by Hastings Direct in Q2 was the single largest inward investment office deal since LSH records began, marking a shift in attitudes towards the city centre.
An absence of speculative development, coupled with an increase in demand across the East Midlands in recent years, has though led to an acute lack of Grade A supply across the region.
In terms of rental income, across the East Midlands these have recovered to new highs, with Leicester set to see further growth in prime rents during 2016. Derby and Nottingham look to remain stable until the delivery of more new-builds.
Jane Taylor, director of office agency at LSH in Leicester, said: “It’s been a good start to 2016 for the East Midlands, with activity in Nottingham nearly twice its ten-year average.
“The demand for high quality central office accommodation is growing, making it a great time for speculative development. Businesses are growing increasingly confident in expansion and subsequent office upgrades across the UK regions and the strength of activity in the East Midlands reflects this.”
Nationally, office take-up was at its highest since 2001, surpassing 2014’s high by 4%. A fall in availability reflected not only healthy net absorption, but also pressure for alternative uses. Speculative development is up by 19%, with developer confidence in the regions restored. The UK office sector is firmly in the midst of a rental growth cycle, with prime headline rents on the up across the majority of UK markets.
