Leicester’s remarkable surge towards winning the Premier League title shows no signs of abating. Claudio Ranieri’s team’s surprising rise to the top dominates out-of-office conversation between East Midlands’ property professionals. The question they might be asking, when sat back at their desks, is whether the region’s office market can replicate the football club’s success?
Let’s consider recent performance, starting with take-up. While Nottingham and Derby have arguably less to write home about (see infographic), Leicester achieved a staggering year-on-year increase according to EGi Research.
Granted, this was coming from a very low base, but standout 2015 deals include the 50,000 sq ft letting to Hastings Direct and prelets to Mattioli Woods (60,000 sq ft) and IBM (30,000 sq ft). Size-wise, these are in a different league for the city.
Overall, then, a sturdy rather than stellar job on take-up. The result is a significant drop in availability in all three centres. Total stock up for grabs in Leicester is now down to 776,100 sq ft – the lowest level of availability since 2005 – and grade-A supply is now down to just 67,400 sq ft, says local agent Innes England.
Nottingham and Derby have also seen office supply drop, with the former seeing huge amounts of office-to-residential conversion for student accommodation in recent years (see p84), and the latter seeing 230,000 sq ft of offices turned into residential space in the last 12 months alone – almost halving its 400,000 sq ft void element, according to local agent Rigby & Co.
So far so good, but what about the future push needed to propel the office sector towards a winning goal? Here things are less rosy: oven-ready office sites are in short supply across the region and no major speculative build projects are currently under way.
However, JLL predicts that there will be a speculative start to a circa 80,000 sq ft building in Nottingham’s city centre before the year is out, though it will not identify either the site or the developer. Is this wishful thinking, or insider information? Possibly the latter, as on the owner-occupation front, Nottingham-based surveyor NG reckons it has a client poised to push the button on a 23,000 sq ft new-build in Edwalton, West Bridgford, an affluent suburb of the city.
The lack of grade-A supply is pushing rents up across the board, notably for refurbished space, which according to JLL have leapt up from £16.50 per sq ft to £19.
It seems unlikely that even a turbo-charged series of deals can push East Midlands offices to victory this year, but, as the Foxes have proved, it is unwise to discount the underdog.
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