In the latest regional prime office rents research by global real estate advisor, CBRE, rental growth in Southampton is forecast to increase by an average 2.1% over the next five years, one of the highest rates of increase of any of the regional centres covered by the research.
The figures focus on rents for existing buildings and there is an expectation that a two tier market will emerge with rents for buildings that are bespoke built achieving higher levels, dictated largely by the cost of construction. In the event of major pre-lettings anticipated rents will undoubtedly be higher with CBRE predicting levels in the mid £20s per square foot.
The key to improvement in the regional office market will be a return to meaningful employment growth following improvement in overall levels of business confidence. Over the course of the next five years CBRE expects office based employment across Southampton to grow by 1.9%, similar to that expected in Bristol and ahead of other cities including Liverpool and Birmingham. Across the regions, growth will principally come from expansion of jobs in business administration and support services, as well as professional and technical occupations.
Commenting on the research, CBRE Southampton’s Managing Director, James Brounger says:
“Demand for office space is likely to be seen more strongly by 2014 as employment growth begins to drive the need for space which will in turn lead to rental growth elsewhere. In addition, the availability of modern, Grade A stock, is likely to be in short supply in a number of cities, due to the lack of speculative development.”