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Are Regional Office Markets Starting to Recover?

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finance  banking  Savills  Manchester  BNP Paribas  Mat Oakley  Sheffield  Leeds  regional office property performance  Patrick Joynson  commercial property research 

Are Regional Office Markets Starting to Recover?

By - Tuesday 12 June 2012

There are indications some of the UK's regional office markets are beginning to improve, with new Savills research highlighting the positive outlook for Manchester. In the report, which assesses the performance of the city's office sector in the first quarter of this year, the firm predicted rents will increase over the next two years. Head of Savills Manchester Patrick Joynson explained offices of less than 10,000 sq ft have already experienced price growth and this trend is set to spread to larger premises, fuelled, in part, by a lack of supply of suitable stock.

Although take-up of space was down in the first quarter of 2012, compared to the final three months of 2011, the organisation is confident this will rebound. Mat Oakley, head of commercial research, highlighted the city's strengths: "Manchester remains a diverse market in terms of occupier types and the fact that it doesn't rely too much on either the public sector or banking and finance should ensure that take-up recovers sooner than some other markets."

Leeds, meanwhile, is an example of a city where occupancy levels do not appear to have overly suffered. According to a report published last month by BNP Paribas Real Estate, take-up of Leeds office property was strong in the three months from January to March this year - rising by 83 per cent compared to the final quarter of 2011. In addition, the sector is on track to match the annual take-up recorded in 2011.

By contrast, Sheffield saw occupier demand fall in the first quarter of 2012, but BNP Paribas Real Estate noted the market will be supported by businesses seeking spaces of 10,000 sq ft or less. Rents remained stable in the sector, while investment in Sheffield office assets was up significantly at the start of the year, compared to the same period in 2011, when no deals were completed in the sector. A purchase by British Waterways of a building for GBP 7.05 million helped ensure transaction volumes in the January to March quarter were comparable to those recorded in the final three months of 2011.

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