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UK Regional Office MarketBeat Reports

22/02/2022

Office Marketbeat reports summarise the quarterly supply and demand for office property across the UK's key cities, providing comment on recent trends as well as market data and analysis.

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Birmingham – Q4

Occupier activity: After a particularly strong third quarter, take up in Q4 2021 fell to 160,498 sq ft although notably this figure is five times higher than the same quarter in 2020. Take up for the year totaled 642,136 sq ft, 22% higher than last year but 13% below the five year average. Sentiment is strengthening and there is solid demand for space across all size brackets. The largest transaction of the quarter was Shoosmiths’ acquisition of 32,900 sq ft at 103 Colmore Row.

Investment activity: There were no investment transactions in the final quarter of the year. During 2021, there was £105 m of activity in the Birmingham market, one of the lowest on record. The ongoing lack of stock continued to weigh on activity. Although investor demand remains strong, driven in part by the particularly tight occupier market, lack of speculative development and turnover will continue to reflect stock availability. The prime net initial yield remained stable at 4.50%. >>DOWNLOAD IN FULL

Bristol – Q4

Occupier activity: Take-up rose to 249,944 sq ft in the final quarter, its highest level since 2019 and 73% above the five-year average. Despite the strong finish to the year, take-up for 2021 totalled 528,054 sq ft, 8% below the five-year average. Despite the lower figures, requirement levels and viewing activity is promising, with a focus on quality options in the market. The largest transaction of the quarter was the University of Bristol’s acquisition of 74,373 sq ft at 1 Trinity Quay. 

Investment activity: There was one investment transaction in the Bristol market in the final quarter of the year; Boultbee LDN acquired One Castle Park from Circle Property for £20.0 m. The ongoing lack of stock continued to weigh on activity. Although investor demand remains strong, driven in part by the particularly tight occupier market, lack of speculative development and turnover will continue to reflect stock availability. Reflecting the growing imbalance between demand and supply, pricing remained stable at 4.75%. >>DOWNLOAD IN FULL

Edinburgh – Q4

Occupier activity: Take-up in the fourth quarter totalled 259,895 sq ft, more than double the previous quarter’s level and double the five-year average. Take-up for the full year reached 571,111 sq ft, the highest annual total since 2017 and indicative of the strengthening activity as the year progressed. There was a focus on quality stock, reflecting a flight to quality in the Edinburgh market. The largest transaction of the quarter was FanDuel’s acquisition of 2 Freer Street totalling 58,870 sq ft. 

Investment activity: Investment turnover in Edinburgh totalled £122.06 m in the final quarter of the year. There were three transactions, the largest of which was CBRE IM’s purchase of Exchange Place 1 for £50 m. Although investor demand remains strong, driven in part by the particularly tight occupier market, lack of speculative development and turnover will continue to be a reflection of stock availability. Demand was reflected in the net initial yield, which remained stable at 4.50%. >>DOWNLOAD IN FULL 

Glasgow – Q4

Occupier activity: Take-up totalled 84,580 sq ft in the final quarter of the year, taking the total for 2021 to 487,846 sq ft, almost 50% higher than the previous year. The rise in demand for new and refurbished space was of particular note, with 268,531 sq ft transacted during the year, almost four times higher than 2020. Sentiment has improved throughout the year, and we expect a strong recovery once the economy fully reopens. The largest transaction of the quarter was Transport Scotland’s acquisition of 48,870 sq ft at 177 Bothwell Street.

Investment activity: Investment turnover in Glasgow totalled £4.95 m in the final quarter. Turnover for the full year was £190.89 m, a 140% year-on-year increase. General investment activity has been subdued since the beginning of the first lockdown with little new stock released to the market. We expect turnover to be heavily influenced by stock availability in the short term. The prime net initial yield remained stable at 4.75%. >>DOWNLOAD IN FULL

Leeds – Q4

After a particularly strong third quarter, leasing activity fell bank in the final quarter although sentiment remains healthy. Take-up in Q4 2021 totalled 145,506 sq ft, a 28% fall quarter-on-quarter but still 65% above the same quarter last year. Take-up for the year totalled 624,192 sq ft, an 82% improvement on 2020 but still below the five-year average of 675,000 sq ft. The largest deal of the quarter was co-working provider Cubo’s acquisition of 19,821 sq ft at 6 Wellington Place. Availability in Leeds rose in the final quarter of the year as a glut of second-hand space came to the market. Supply is now 959,932 sq ft, 11% higher than the previous quarter although comfortably below the five-year average of 1.1 m sq ft. The availability of new and refurbished space remained particularly tight at a vacancy rate of just 0.8%. The prime headline rent remained stable for the sixth consecutive quarter at  £34.00 per sq ft; we expect the lack of quality space in the market to prime rental growth as we move through 2022.

Investment turnover in Leeds totalled £85.5 m in the fourth quarter. There were four transactions, the largest of which was Grosvenor’s purchase of Toronto Square for £35.0 m. The Leeds market saw £267.9 m of investment sales in 2021, a 14% improvement on the previous year. The ongoing lack of stock continued to weigh on activity. Although investor demand remains strong, driven in part by the particularly tight occupier market, lack of speculative development and turnover will continue to reflect stock availability. The prime yield remained stable at 5.00%.>>DOWNLOAD IN FULL

London – Q4

The second half of 2021 has shown clear evidence of a post-pandemic rebound for the London office market, with take-up levels markedly rising and space under offer in line with, or exceeding, the five-year quarterly average. A total of 2.7m sq ft was transacted during the fourth quarter of 2021 across Central London. This brought the total year leasing volume to 8.6 million sq ft, 93% above last year (4.4 million sq ft) and 12% below the five-year annual average of 9.77 million sq ft. Total availability, of both new and second hand space, continued its increase for another consecutive quarter to stand at 23.4 million sq ft, reflecting a vacancy rate of 8.27%. Newly built/refurbished stock accounted for 48% of total supply at the end of December, equating to 11.3 million sq ft.

Central London investment increased by 62% in Q4 to total £5 billion. This took investment for 2021 to £12.5 billion, 39% above 2020 but remaining 14% below the five-year average. This was largely as a result of limited investment during the first three months of the year, which subdued the annual total. The market has noticeably rebounded during the final three months of 2021 – as evidenced by the significant quarterly, and annual, rise in volumes. This was also the highest Q4 volume since 2017, showing extremely positive signs for the market as we enter 2022.>>DOWNLOAD IN FULL

Manchester – Q4

Occupier activity: Take-up rose to 347,141 sq ft in the final quarter, the highest since Q4 2020. Sentiment continued to improve, which was reflected in the market’s strong end to the year. Inward investment continues to play an important role in Manchester’s city centre office market, accounting for 33% of total take-up in 2021. Total take-up for 2021 was 1.1 m sq ft, 28% higher than the previous year and only 11% below the 10-year average. There remain some large requirements in the market, which should help support leasing activity during 2022. The largest transaction of the quarter was Roku’s acquisition of 115,066 sq ft at Circle Square.

Investment activity: Investment turnover totalled £56.3 m in Q3. There were 3 transactions, the largest of which was Catella APAM’s acquisition of Corner Block, Quay Street for £24.8 m. General investment activity has been subdued with little new stock launched to the market since the beginning of lockdown. The prime net initial yield remained stable at 5.00% reflecting the continued lack of supply. >>DOWNLOAD IN FULL

Newcastle – Q4

Occupier activity: Take-up totalled a record-breaking 519,119 sq ft in the fourth quarter for Newcastle Upon Tyne, driven by HCHLG/HMRC’s pre-let of 462,847 sq ft at Pilgrim’s Quarter, the largest transaction ever recorded in this market. Take-up for the full year reached 630,079 sq ft, four times higher than the previous year and more than double the five-year annual average.

Investment activity: There was one investment transaction in the fourth quarter: Topland Group’s purchase of Citygate II for £19.0 m. The ongoing lack of stock continued to weigh on activity. Although investor demand remains strong, driven in part by the particularly tight occupier market, lack of speculative development and turnover will continue to reflect stock availability. Pricing remained stable at 5.75%.  >>DOWNLOAD IN FULL

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