Regional Office Market Outlook

In a recent 2016 reporty by Savills, the consultant points to a trend for demand for prime office space in regional cities to increase dramatically during 2016.

Savills say that demand is driven by local businesses, start-ups, and the rise in ‘northshoring’, where London costs are driving relocations to regional markets.

Manchester, Birmingham, Cardiff and Edinburgh saw increases of 39%,105% 41% and 44% respectively, above their ten year average annual office take-up, with Birmingham and Cardiff having record years. Bristol is tipped to see the best lettings growth in 2016.

Metropolis has seen a 20% rise in the number of regional city office requirements between 2014 and 2015.

Deutsche Bank’s move to Birmingham and HSBC pre-let of 210,000 sq ft at Birmingham’s new 2 Arena Central scheme are examples of ‘northshoring’ with companies moving staff away from London to cheaper office space in regional cities. In addition, the number of local pre-lets in regional cities is growing, such as Squire Patton Boggs’ pre-let on 27,500 sq ft at No.1 Spinningfields in Manchester and Cirrus Logic’s 70,000 sq ft pre-let at Quartermile 4 in Edinburgh.

Tenant demand has re-ignited speculative office development in regional cities, with construction up 130% on a year ago.

Savills concludes that UK wide activity points to increasing demand from sectors such as TMT which is estimated to see a c.700,000 of jobs created in the regions over the next 10 years. More office requirements from public sector agencies and Central Government are also expected

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