Demand for office space in the UK’s leading regional cities is at a 10-year high, according to the latest regional office market report from Knight Frank.
Take-up exceeded 7m sq ft last year across 10 key regional cities – Manchester, Birmingham, Sheffield, Leeds, Aberdeen, Edinburgh, Glasgow, Cardiff, Newcastle and Bristol – the highest in a decade, and 24% ahead of the 10-year average.
Knight Frank’s report added that Leeds was particularly buoyant in 2017, with over 1m sq ft of office space rented – 88% higher than the 10-year average – while take-up in Birmingham and Manchester also exceeded 1m sq ft, up 34% and 13% on the cities’ respective 10-year averages.
In addition, Sheffield, Edinburgh and Cardiff all recorded take-up at least 25% above their respective 10-year averages.
According to Knight Frank, surge in demand for office space has been driven partly by growth in the professional services and tech, media and telecoms (TMT) sectors.
Last year, professional service companies accounted for 20% of all office space let in these regional cities, while the TMT sector accounted for 18%.
The government’s centralisation of its office estate has also had an impact on the regional office market, with the public sector accounting for a quarter of the office space let in 2017.
Beyond London
Investment demand for regional office assets also increased in 2017, reaching £7.7bn – 62% above the 10-year average and a third more than 2016.
UK institutions accounted for 42% of transactions across the 10 key regional cities.
Alastair Graham-Campbell, partner and head of UK cities at Knight Frank, said: “The strong demand for office space in regional cities is driving up rents, and leading to many investors to broaden their attention beyond just London.
“The volume of office space leased in 2017 underlines that the reinvention of our regional city centres is delivering the right product to attract major occupiers. The challenge is to continue to deliver the space needed to meet demand.”
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