Office occupier activity is at its highest level for two years while UK property companies dominate Q3 investment activity, according to latest data.
Avison Young’s latest regional office markets report for Q3 2021 said that occupier confidence across the ‘Big Nine’ office markets of Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle, had reached its highest level since the pandemic started.
Across city centre and out-of-town markets, take up totalled to 2.3 million sq ft, an increase of 11 per cent on the 10-year average. Increasing confidence has released pent-up demand for requirements that have been on hold during the past 18 months, the report said.
Out-of-town activity accounted for 45 per cent of all take-up, the strongest quarter for three years at more than 1 million sq ft.
Demand for Grade A office space remained robust, the report said, making up 85 per cent of activity in Birmingham.
The flexible workspace sector had the busiest quarter in two years.
Availability across the big nine city centres increased from a cyclical low of 8.1 million sq ft in the first quarter of last year to 11.6 million sq ft over the course of the pandemic.
There was a further 5.1 million sq ft of space under construction, of which 2.3 million remained available.
Greater demand increased prime rents by 2.5 per cent over the last year, now averaging £32.61 per square foot.
Charles Toogood, principal and managing director, national offices team at Avison Young, said: “A post-Covid focus on flexibility is underpinning a rise in demand from flexible workspace providers and driving the proliferation of Cat A+, plug and play space.”
Confidence in the regional office investment market remained robust, with activity over the past 15 months performing above the long-term average.
Total investment volumes during Q3 amounted to £753 million, 26 per cent up on the 10-year average of £599 million.
UK property company transactions made up 88 per cent of volumes, against the tide of strong overseas investment for the last year.
Mark Williams, principal and managing director, regional investment at Avison Young, said: “There continues to be a considerable weight of money looking to invest in the regional office market, and Q4 is expected to be the strongest quarter of the year, particularly given the slow start we had to 2021.”