United Kingdom Office - The Property Perspective H1 2017
The UK economy continues to show resilience during the first half of 2017, although there are signs that GDP growth may be slowing, as rising levels of inflation begin to influence consumer markets..
However, despite this, regional office markets have seen strength in demand be maintained. Across all the ten regional cities monitored in this report, overall take-up in H1 was 2.8 million sq ft, only a few percentage points lower than the average over the last five years.
In the South East, 1.1 million sq ft has been acquired for occupation in units of over 10,000 sq ft. The creative industries sector accounted for 35% of take-up in the first half with consumer brands also active this year. Many occupiers are also looking to take space on increasingly flexible terms.
As ever, there are cities that have bucked the overall trend. So far this year, the cities with improved levels of take-up have been Aberdeen, Leeds and Manchester. Edinburgh also falls into this category – thanks to a large pre-let to the Government Property Unit, take-up in Scotland’s capital is already ahead of last year’s full-year total.
Investment interest in the larger regional cities remains buoyant, but with £1.4bn spent so far this year on offices beyond London and the South Eastern regions, investments volumes are down compared to 2016.
Weaker sentiment will have some impact on UK property pricing, but as yet there is insufficient evidence on how significant that impact will be. Fairly priced stock will continue to sell and there will be ongoing interest in markets which continue to trade at a discount to London and the South East.