The UK Office Market and Key Locations
The UK office market is growing year on year. The demand for office space in most of the cities of the country continues to expand and while there are some places where you will find empty office space, these tend to be specialist units where a former long-term occupant has left or gone out of business. In the majority of cases, firms looking for a regional headquarters or a place to relocate and expand are seeking newer developments which can provide all of the spatial flexibility and IT services that are needed in the information age. Proximity to airport hubs and the motorway network continue to be the most important factors when it comes to newly developed office spaces. Developers, it seems, know about the continuing importance of infrastructure and plan their office and warehouse developments in these key locations.
According to CBRE, the US-based commercial real estate company, the take up of office space in Central London in October 2013 was 1.08 million square feet. This figure represents a 20 percent growth compared with September of the previous year. Indeed, it is nearly two thirds higher than the corresponding month in 2012. Take up of office space by businesses in the City of London outstripped that of the West End, but both were returning to the levels of the autumn of 2010. Office space take up in the Southbank area of the Thames was also strong in the second quarter of 2013-14 and this location accounted for no less the 8 per cent of the total amount of take up. The newly built Shard, with 425,800 square feet of office space, continues to be the largest available unit in the capital. More about the Central and Greater London office market here.
In the UK's second city, office take up is no less impressive than in London. Big name brands all took up significant office spaces in Birmingham with Deutsche Bank occupying a site with 134,000 square feet in one of the biggest deals of last year. Allianz, Forresters and DWF were all also involved in new leases of large amounts of space around the city. Offices with prime locations have held steady prices at about £28 per square foot and many landlords in the region reported a growth in yields throughout 2013.
Scotland's biggest city has seen some important new office tenants as well. Atos, which has won many government contracts in recent years, took over a prime office site with 37,000 square feet of space in York Street. In the financial sector, KPMG, JP Morgan and the Students Loans Company all did new office deals. Like Birmingham, centrally located offices in Glasgow continue to hold their rent prices with no sign of dropping off at around the £27 per square foot mark. Manufacturing businesses continued to be Glasgow's most important occupier of offices, but the government and public sector is now not far behind. More Scottish office market research here.
In 2013, the demand for Manchester's office spaces was particularly varied. Nevertheless, according to CBRE, professional and business services companies have been the most active sectors. In the leading city in the northwest, these two groups now account for 52 per cent of the take up of office space. Prime rentals beat that of both Birmingham and Glasgow, averaging about £30 per square foot. Swinton Insurance was one of the big names to do a new office deal in 2013. It took up an office on Whitworth Street that now provides the company with no less than 20,000 square feet of space.
After a slow start to 2013 – which saw only six office transactions that totalled as little as 32,000 square feet in the first quarter - business in Belfast has picked up. There was a very strong second quarter which resulted in total take up of office space in the city that exceeded 200,000 square feet being let in new deals. This much needed upturn over the course of the first six months of 2013-14 meant that the region saw a an increase of 59 per cent in office letting activity compared with the same period in the previous year. Belfast office rental prices continue to be very competitive when compared to other cities in both the UK and the Republic of Ireland.
Imperial Tobacco, Barclays Bank and Which? were all well-known brands that took on new leases in Bristol's vibrant office market last year. By far the majority of Bristol's office take up was from occupiers renting clerical workspace in second hand spaces, rather than new developments. The Barclays Bank deal, made at Bridgewater House in the autumn of 2013, bucked this trend as the 18,500 square feet of space they signed for is in a prime location and a newly developed site. More on South West office space trends here.