Regional Office Markets Face Challenges in 2011
Since the economic slump, which first began to take hold in 2008, the pipeline of office developments in many UK cities has reached an historic low ΓÇô resulting in a spiralling shortage of grade ΓÇÿAΓÇÖ office space that is predicted to remain in place for a number of years.
While this shortage has prompted a string of previously mothballed office schemes to be dusted-off and pumped back into life, much of this activity has been London-centric, with regional cities such as Manchester and Glasgow continuing to face a diminishing supply of grade ΓÇÿAΓÇÖ space.
One outcome of a shrinking supply, is that competition for the premium office space remaining in the market will increase ΓÇô generating upward rental growth on both prime and average rents.
The SavillsΓÇÖ report indicates that such a rise in rent levels is already being recorded within Central London, a trend which has also been reflected in the capitalΓÇÖs serviced office space market according to industry research published by officebroker.com, the UKΓÇÖs largest independent broker to the serviced office sector.
The result of this rise in the price of commercial office space in Central London is an expectation of recovery in the regional office markets following suit in the next 12-18 months according to Savills ΓÇô a prediction that has once again been echoed by leading figures from the serviced office sector ΓÇô a market which so often mirrors the fortunes of the commercial property market.
Savills does however conclude that there will be winners and losers in the regional office space markets in 2011, with the most successful towns and cities being those which benefit from a strong private sector and where public sector cuts will have a reduced impact.