Prime office rents in the UK’s top 10 regional city centre markets recorded the largest annual rise in more than 20 years in the period Q1 2023 to Q1 2024, according to new data published by BNP Paribas Real Estate.
According to the firm’s ‘Big Ten Regional Office Report’, which tracks leasing and investment activity in Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle and Sheffield, prime rents grew 7.6% year-on-year on average. This was the largest annual rise across the big 10 regional markets since the 9.6% recorded in the period Q1 2000 to Q1 2001.
The largest percentage growth was recorded in Sheffield, with the city experiencing a 15.4% increase in rent to £30/sq ft. Glasgow (pictured) recorded growth of 12.9% to £39.50/sq ft and in Newcastle average rents increased 10.3% to £32/sq ft.
Josh Arnold, senior research analyst at BNP Paribas Real Estate, said: “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.”
Take-up across the top 10 regional office markets increased 9.2% year-on-year to 1.14m sq ft with the Grade A vacancy rate now averaging just 2.3%.
Simon Williams, head of national markets at BNP Paribas Real Estate, said: “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.”
