Knight Frank’s UK Cities Office Market Review 2019

Knight Frank has recently released its UK Cities Office Market Review 2019, providing a concise synopsis of occupier and investor activity in the UK’s regional office markets.

The research focuses on 10 cities: Bristol, Birmingham, Leeds, Manchester, Newcastle, Sheffield, Aberdeen, Edinburgh, Glasgow and Cardiff.

Key takeaways include:

  • Grade A availability in 2019 was 2,000,800 sq ft, 24% below the 10-year average
  • Total take-up reached 6,400,300 sq ft, 8% above the 10-year average
  • TMT accounted for 25% of take-up
  • Investment volumes in 2019 reached £2.7bn, 7% above the 10-year average
  • Foreign investment increased by 10% YOY to £1bn, representing 37% of total investment turnover
  • UK buyers remained dominant, accounting for 56% of investment

Darren Mansfield, Partner in Knight Frank’s Commercial Research team, comments: “Set against the backdrop of political paralysis domestically, office markets across the UK’s regional cities demonstrated resilience in 2019. Leasing volumes finished the year 8% above the long-term trend as business change strategy continued to motivate space moves. Growth of fast-growing tech firms proved a defining factor in market performance, with the technology sector accounting for 25% of space let – the highest representation on record for the UK regional cities.

“We expect 2020 to be greeted with improved confidence and optimism. Requirements previously held back by uncertainty will resurface as occupiers pursue high quality space and prepare earlier for upcoming lease events. A picture of tightening supply will welcome market movers. Development activity is still below the long-term trend, with 35% of space scheduled for delivery before 2023 already leased. This market positioning is likely to fuel pre-let enquires and support further upward shifts to asking rents.”

Alastair Graham-Campbell, Head of UK Cities and Partner in Knight Frank’s Capital Markets team, comments: “Investor activity defied wavering sentiment in 2019, with investment volumes rising to 7% above the 10-year average. Notably, despite uncertainty derived from Brexit, foreign investment increased by 10% YOY to £1bn, however UK buyers remained dominant, accounting for 56% of the market. Demand for long dated secure income was particularly high, with asset management or forward funding opportunities also keenly sought after.”