Regional office demand returned in strength during the first half of 2015, led by a spike from the banking and finance sector, according to CBRE, the commercial property and real estate services advisor.
Strong economic growth and widespread business confidence during 2015 have resulted in strong levels of occupier take-up, most notably across the key cities of Birmingham, Manchester and Leeds. Deals from the banking and finance sectors (19%), along with business services (16%) and professional services (24%), accounted for 59% of total activity in H1.
Other major UK cities that have benefited from this acceleration of office take-up by financial and professional services include Leeds, which saw Equifax take 19,784 sq ft at 6 Wellington Place, Manchester, where PwC has secured nearly 50,000 sq ft at No.1 Spinningfields and in Southampton, which has seen very little in terms of development, PwC has taken on the third floor at Oceana House on a short term basis while it refurbishes its south coast offices at Ocean Village; a key sign of its commitment to the City.
James Brounger, Regional Managing Director at CBRE, said: “Through the first half of the year, UK regional office markets have continued to build upon the growth that took hold last year. In many cities, large professional services and finance organisations have taken advantage of availability of a well-educated, diverse workforce and a new generation of office buildings that are about to appear. This regional appeal has been bolstered by an influx of regional infrastructure investment and regeneration projects. These deals also go some way to counter the perception that these sectors are looking to downsize their UK footprint or offshore operations.
“From an investment perspective, the south coast is benefitting from investors looking beyond the confines of the M25 and Thames Valley markets as they seek opportunities in Portsmouth, Southampton and Bournemouth. As a result prime office yields have now begun to respond to the weight of money targeting the region. While in the short term, yields have remained stable at around 6.5%, with deals due to complete into the second half of 2015, it is expected that yields will fall further and begin to converge with those being achieved elsewhere in the UK’s regional markets.”
