Written by: Anthony Spencer on Tuesday 02/05/2017
It’s estimated that over 6.3 million people in the UK work in offices – a growth of over 8.7% in the last five years. However, supply of Grade A office space throughout the UK is at its lowest since records began. We take a look at which areas are responding to rising demand and how much it’s likely to cost if you want to rent office space.
A quick snapshot [below] of five cities in the UK (London represented by three inner London areas) reveals the disparity between the price of prime office space in the capital and that of its counterparts elsewhere in the country.
Prime rents in the UK’s second city have averaged out at £32.50 per square foot (psf) during the second half of 2016, an increase of 5% on the first six months of the year, with demand for office space levelling off slightly. The city centre has approximately 11% of its Grade A office space vacant at the moment although around 619,000 square foot of new Grade A space is expected to be delivered over the next few months.
The lack of supply of Grade A office space in Bristol continues to pose a problem for tenants seeking quality accommodation, and record low vacancy levels mean that rents will continue to rise from their current yearly average of £28.50 psf, possibly topping £30 by the new year – some analysts expect them to rise to £33 psf by 2020.
Tenants seeking prime office space in Leeds city centre have a good choice available and can expect to pay rents averaging £27.00 by the end of this year. Tenancy rates fell by 45% on the second half of 2015, reflecting national economic fluctuations and uncertainty, post-referendum. Leeds, however, represents good value-for-money for tenants seeking prime office accommodation, when compared to other areas.
Grade A office accommodation in the West End of London stayed at its record high of £115.00 psf despite a rising level of vacancies.
Prime rent for Grade A offices in the City rose by over 7% during 2016 and are now at £70.00 psf.
Docklands remains attractive to tenants thanks to the quality of the accommodation and attractively-priced rents (£39.00 psf).
With demand for Grade A offices in Manchester far outstripping supply it is anticipated that today’s rental of £35 psf will be surpassed by 2019 when it is expected to reach £40 psf. Investment activity remains high in the city and a number of new developments are in the pipeline.
If you need advice about sourcing office space anywhere in the UK, talk to a member of our team. We can help you in your search for the ideal location.