Major requirements point to a strong Q4
Office take-up across the regional cities reached 1.1 million sq ft in Q3. Despite this being more subdued than the first two quarters of 2015, the high level of requirements in the regional markets point to a strong final quarter.
Manchester and Birmingham are on course to reach record levels of annual take-up in 2015. In particular Manchester has two 100,000 sq ft requirements which will likely push the city over 2014’s record take-up volume of 1.3million sq ft.
Grade B availability trending downwards
With limited grade A availability and low levels of development over the last several years, some regional occupiers have had no option but to take good quality B space in the city centres. Consequently grade B availability has fallen by a third over the last three years and there is currently only 1.8 years of supply at prevailing take-up rates.
Grade B availability is particularly low in Birmingham, Bristol and Leeds where less than a year’s supply remain.
Prime rents to rise 8% in three years
The pick-up in the development pipeline has seen the demand for grade A space intensify. Prime rents are set to rise as higher quality space is brought to the market and occupiers continue to pre-lease the space under construction. Over the next three years, prime rents are expected to rise by 8% on average. The largest increase will be in Manchester where rents are expected to increase 13% from £32 per sq ft to £36 per sq ft by 2018.
Source : Cushman & Wakefield