The UK’s big six regional cities saw a 38% year-on-year increase in third-quarter office take-up to 1.2m sq ft – the highest in Q3 since 2018.
Each reported better take-up compared to the same period last year, according to a report by Savills, as Manchester posted a 23% increase, Edinburgh 20%, Bristol 12%, Glasgow 8% and Leeds 6%.
However, all were outshone by Birmingham, which saw a 165% year-on-year increase in take-up driven by two big educational deals – Aston University taking 190,000 sq ft at 10 Woodcock Street and Global Banking School taking 68,000 sq ft at One Brindleyplace.
These deals also contributed to the public services, education and healthcare sectors accounting for 30% of total take-up across the six markets.
The quarter’s largest deal, and the largest in the regional cities since 2020, took place in Manchester, as Bank of New York Mellon took 197,000 sq ft at 4 Angel Square at NOMA.
Rents continued to rise as occupiers sought out the best office space, with Bristol seeing the largest year-to-date increase at 13%. Rents rose by 4% in Birmingham, 3% in Leeds and 2% in Manchester.
James Evans, head of national office agency at Savills, said these numbers were encouraging and demonstrated the markets’ “remarkable resilience”. Hovever, he added: “We have noticed a slowdown in enquiries and decision making as we get closer to the Budget.”
Yet Evans’ investment colleague at Savills, James Emans, said there were reasons for optimism in investment in the big six, where £2.1bn transacted between Q1 and Q3 this year – a 7% rise compared to the same period last year, but still 50% below the five-year average for the same period.
“From an investment standpoint, volumes have been suppressed but we are now getting significantly more traction, which, given the positive occupational metrics, is not surprising,” Emans said. “The combination of limited development pipeline and a dwindling supply of grade-A offices supports the projections of continued rental growth across the regional office markets, presenting opportunities for liquid and decisive investors.”
There were £1.02bn of investment deals in the third quarter, nearly double that of the previous quarter, which the report said demonstrated improved investor sentiment.
The quarter also saw two deals for over £100m: the sale and leaseback of Cody Technology Park in Farnborough for £112m and the sale of Abcam’s headquarters at Cambridge Biomedical Campus to Danaher Corp for around £100m.
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