Tenants’ market?
UK regional office take-up fell 20% in 2009 compared with the previous year, according to DTZ Research. The latest market update for nine UK cities, reported by the Western Mail, shows that take-up fell on aggregate across all nine key regional office markets in the fourth quarter of last year, as expected. This followed some exceptional deals in Q3, particularly in Birmingham and Nottingham, which boosted take-up sharply in that quarter.
The report quotes Rhys James, senior director at DTZ’s Cardiff office, as saying that 2010 looks like being another competitive year “in which landlords will need to work very hard and be particularly generous and flexible if they are to attract new tenants and if they are to retain their existing tenants.”
The report notes that occupiers in 2009 were able to take advantage of the market conditions to consolidate their accommodation or to upgrade to better-quality or more efficient floorspace, while maintaining or cutting costs.
DTZ Research forecasts that take-up in 2010 will be down a further 13% compared with the outturn for 2009, which itself is around 40% lower than the market peak in 2007.
Some further consolidation and release of unwanted space is expected in the UK regional office market, particularly in the banking and insurance sectors, but at a slower rate than in 2009. Availability is likely to have peaked, or will peak, in the first half of 2010 for most markets, the report says, especially as the development pipeline is now more or less exhausted. Headline rents, after falling for several quarters, are expected to remain stable or experience only modest further declines, DTZ adds.
