The Big Six regional office markets in the UK – Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester – recorded overall third-quarter city centre take-up of 1.2 million square feet, up 38% year-on-year and the highest third quarter take-up since 2018, reports Savills.
Birmingham performed "exceptionally well", Savills said, reporting a 165% third-quarter increase in take-up driven by two big education deals – Aston University taking 190,000 square feet at 10 Woodcock Street and Global Banking School taking 68,000 square feet at 1 Brindley Place. The largest deal was Bank of New York Mellon taking 197,000 square feet at 4 Angel Square in Manchester, which is also the largest deal year to date.
Take-up increased in Manchester (23%), Edinburgh (20%), Bristol (12%), Glasgow (8%) and Leeds (6%) compared with the same period last year. The most active sector in the third quarter was public services, education and healthcare accounting for 30% of total take-up, Savills reports.
Rents continue to face upwards pressure as occupiers seek out and compete for the best office space. Bristol has had the largest increase year-to-date at 13%. Rents in Birmingham (4%), Leeds (3%) and Manchester (2%) also increased over the course of this year.
James Evans, head of national office agency at Savills, said in a statement: “The UK regional office market has demonstrated remarkable resilience, with Q3 take-up reaching its highest level since 2018. While these figures are positive, we have noticed a slowdown in enquiries and decision making as we get closer to the Budget.”
Savills notes that there has also been an increase in investor activity across the regional office investment market with £2.1 billion transacted between Q1-Q3 2024, 7% above the same time period in 2023. Activity is still subdued compared with average levels with volumes 50% below the five-year average for the same time period.
Activity in the third quarter 2024 has picked up with £1.02 billion transacted, which was more than double the total recorded in the second quarter of 2024 demonstrating the improved levels of investor sentiment. There were two deals recorded over £100 million, the sale and lease back of Cody Technology Park in Farnborough, and Abcam’s headquarters at Cambridge Biomedical Campus being sold to Danaher Corporation.
James Emans, director, UK investment at Savills, said: “From an investment standpoint, volumes have been suppressed but we are now getting significantly more traction, which, given the positive occupational metrics, is not surprising. The combination of limited development pipeline and a dwindling supply of Grade A offices supports the projections of continued rental growth across the regional office markets, presenting opportunities for liquid and decisive investors.”