UK regional prime office rents record the largest annual climb in 20+ years

New analysis from BNP Paribas Real Estate reveals that prime office rents in the UK’s top ten regional city centre markets have recorded the largest annual climb in over 20 years.

According to the firm’s Big Ten Regional Office report – which analyses leasing and investment activity in Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, and Sheffield – prime rents grew 7.6% year-on-year from Q1 2023 to Q1 2024 on average, representing the largest annual climb across the big ten regional markets since Q1 2000 to Q1 2001 (9.6%).

City (Central) Prime rent (£ per sq ft) Prime rental growth Q1 2023 – Q1 2024 (year-on-year)
Bristol £46.00 8.2%
Manchester £43.00 7.5%
Birmingham £42.50 6.3%
Edinburgh £42.50 6.3%
Glasgow £39.50 12.9%
Leeds £38.00 2.7%
Newcastle £32.00 10.3%
Sheffield £30.00 15.4%
Cardiff £25.00 0.0%
Liverpool £24.00 7.5%

Josh Arnold, Senior Research Analyst at BNP Paribas Real Estate commented: “Limited supply of new, Grade A office space in the regional markets continues to restrict opportunities for prospective occupiers, and this is placing upward pressure on prime rents. With very tight supply for the most in-demand space, coupled with rising rents, it’s now common place to see occupiers with upcoming lease events who are seeking office upgrades to act competitively to secure pre-lets as early as possible. The development pipeline, however, remains scarce and this presents landlords with a significant opportunity to retrofit space to capture this demand for Grade A offices.”

Arnold points to three key figures from Q1 2024 which underpin the current outlook for offices in the top ten regional city markets:

  • Take-up reached 1.14 m sq ft, a 9.2% increase year-on-year
  • Grade A vacancy rate is averaging at just 2.3%
  • Of the 5.5 m sq ft of office space currently under construction or renovation, 38% has already been pre let

Simon Williams, head of national markets at BNP Paribas Real Estate added: “Leasing activity is largely being driven by occupiers seeking relocations to upgraded office space and this shows no signs of slowing down as corporates embrace new working practices with a focus on quality collaborative workspaces and excellent amenity offers. This is all very positive news for landlords who are bringing forward Grade A space, or have the ability to. Meanwhile, the changes to permitted development rights should generate more conversions of redundant offices to alternative sectors, and this will be a great boost to regional city centre regeneration.”

BNP Paribas Real Estate’s data reveals that in Q1 professional services accounted for the largest take-up share by occupier type at 26.7%, followed by public sector (15.5%) and banking and finance (12.6%).