Offices take-up stable in regional markets as speculative schemes get under way – JLL
Take-up of office space in UK regional markets this year appears likely to reach similar levels to 2010, says Jones Lang LaSalle. Its survey of the markets for available office space in Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Manchester and the Western Corridor region showed combined take-up of more than 1.5m sq ft during Q3. This was up 22.9% from the previous quarter but down 36.3% year-on-year, JLL says. “The economic frailties, which have been evident over recent months, have not yet been reflected in regional office take-up volumes,” the firm adds.
Some larger deals in the Western Corridor region boosted the overall figure, but by contrast there were no deals concluded over 10,000 sq ft in Bristol. There were some speculative starts during the third quarter in response to a looming supply shortage. There is just over 1m sq ft of office space under construction speculatively in the eight markets monitored by JLL, up 14% from the previous quarter. JLL says this was driven by increased development activity, with a number of new starts in Glasgow, Cardiff and Leeds, underpinned in part by pre-lets.
Vacancy rates across these eight regional markets slipped to 12.3% on average in Q3, from 12.6% in the second quarter. Again the picture was mixed, JLL says, with overall supply continuing to increase in Birmingham, Glasgow and Bristol. Grade A vacancy rates fell to just 4.0% from 4.3% in Q2 on average, but the rate was as low as 2.1% in Manchester.
Rents rose q/q in Manchester (+5.3%) and in the Western Corridor (+1.4%) as the shortage of Grade A stock drove up levels. By contrast, the market softened slightly in Edinburgh as take-up activity continued to fall. Elsewhere, rents were stable over the quarter. “Prime rents remain heavily supported by incentives with up to 30 months rent-free achievable in most locations,” the firm said. In total, UK regional rents were up 1.7% year-on-year.
