The picture in regional office markets in the UK will begin to improve over the course of 2012, following a largely poor 2011. This is the assertion of Mat Oakley, director of commercial research at Savills, who is confident some of the growth experienced in London's office sector will start to filter out to "some of the key regional cities". "We expect to see rising rents in the office markets outside of London this year, which we didn't really see last year," he stated.
Leeds is one such market where an improvement could be on the cards in 2012. According to figures released by Jones Lang LaSalle earlier this month, take-up of office space in the northern city climbed by 5.2 per cent during 2011, with the level of interest from occupiers expected to "remain constant" this year. The firm noted that yields continue to sit at 6.25 per cent, with the average price per sq m for prime space standing at GBP 26 per year. Richard Thornton, director in the organisation's Leeds National Office Agency team, commented: "With few new construction starts, some landlords are taking the opportunity to upgrade secondary assets and take advantage of occupiers' continuing flight to quality. We believe that 2012 could see the return of some pre-letting activity, which could kick-start some much-needed speculative space in the city centre."
In Knight Frank's recent index of global central business district (CBD) office rents for the fourth quarter of 2011, the firm predicted there will be a marginal rise in the cost of leasing such space in Leeds. The city was ranked 47th in a list of the 50 most expensive office markets in the world. Other UK CBDs included in the table were Manchester, Birmingham, Bristol and Edinburgh, with the office sectors in these cities expected to remain flat over the course of 2012. Aberdeen was the only other British location - with the exception of London - where marginal growth in rental prices is anticipated.