Speculative development will increase over the next 12 months as availability of quality space continues to plague the UK. That was the overwhelming outcome from Estates Gazette’s latest reader survey, The REview.
This month the reader poll, in association with Trowers & Hamlins, looked at the occupier market and what was driving or holding it back. Every respondent said that there was a shortage of good-quality space in their area, driven predominantly by age of stock (60%) and the size of space available (50%).
Demand continues to come from the traditional sectors of professional and business services, the finance sector and technology and telecommunications. The strength of the UK economy has already brought confidence back to the occupational market and will continue to do so, say respondents.
Looking ahead, recovery in the financial services sector and certainty on rates will help confidence grow. Rents, too, will strengthen – 67% of readers expect moderate growth of 1-5% over the coming year and the remainder predict 6-10% increases.
However, the lack of funding for speculative development is restricting the provision of quality space, according to the majority of the respondents. Despite that, 100% said they believed there would be more speculative starts in the coming 12 months.
Adrian Leavey, real estate partner at Trowers & Hamlins, said: “If the survey findings are a true reflection of the current state of play, even with the prospect of moderate rental growth, the industry is quite confident that speculative office development will return to UK cities. However, whether or not the majority of UK cities will see this development remains to be seen.”
