Occupier market in brief

Big Nine occupier market in brief

Following an extremely active Q4, take-up activity unsurprisingly reduced during Q1, with a total of 1.1 million sq ft let across the Big Nine markets. While this reflected a 40% decrease from the previous quarter, this is mainly down to take-up during the final three months of 2021 being so far ahead of the long-term average. Q1 take-up, therefore, fell just 17% below the 10-year quarterly average with the 5-year quarterly rolling average changing by just 0.2%.

While most markets saw activity fall below average levels; Bristol, Cardiff and Newcastle were notable exceptions. Bristol saw the highest take-up across the Big Nine with take-up reaching 249,944 sq ft, 62% above the five-year average. Key deals included two lettings greater than 20,000 sq ft – the largest of which was 54,767 sq ft to Paymentsense at CEG’s speculative development, EQ. Separately, at Halo, Finzels Reach, Deloitte leased 22,500 sq ft.

In Cardiff, city centre take-up exceeded the 5-year average by 37% after more than a twofold increase on the amount of space let in Q4 2021. Cardiff saw the largest deal of the quarter across all Big Nine cities, with BT taking over 65,000 sq ft at 3 Capital Quarter. The move is part of BT’s five-year workplace transformation hub programme which has seen the company upgrade many of their offices around the UK.

The professional services sector was particularly active across the Big Nine markets accounting for a third of Q1 take-up. Key deals included Deloitte’s deal in Bristol, Shoosmiths which agreed to take 16,383 sq ft at Haymarket Square, Edinburgh; and Clifford Chance which leased 15,182 sq ft at The Lumen in Newcastle. The TMT & Creative and Financial Services sectors were also significant sources of demand, accounting for 24% and 14% of take-up respectively. Other significant deals across the Big Nine markets included OPG leasing 27,123 sq ft at Victoria Square House, Birmingham, Burnes Paul signing for 14,814 sq ft at 2 Atlantic Square, Glasgow and HG Construction leasing 14,126 sq ft at Belgrave Hall in Leeds.

Other significant deals across the Big Nine markets included OPG leasing 27,123 sq ft at Victoria Square House, Birmingham, Burnes Paul signing for 14,814 sq ft at 2 Atlantic Square, Glasgow and HG Construction leasing 14,126 sq ft at Belgrave Hall in Leeds.

During the opening quarter of 2022, availability increased by 4% in total, however the amount of space on the market is still some 10% below the 10-year average. The Big Nine vacancy rate therefore also showed a slight increase, moving from 8.1% at the end of Q4 2021 to 8.3% at the end of Q1 2022. There is currently 4.6 million sq ft of office development under construction across the Big Nine markets, with Glasgow the most active, with 1.1 million sq ft currently being built. However, due to the significant demand in the market, 97% of this has already been pre-let, with only the remaining 30,764 sq ft at 177 Bothwell Street available.

Demand for the best space continues to put pressure on headline rents, and as a result many Big Nine markets experienced rental growth during Q1 with the average net effective rent increasing by 3% in just three months. In Bristol, rents increased by over 10%, moving from £38.50 per sq ft to £42.50 per sq ft. Newcastle also saw significant growth with rents increasing by 5.8%, while Liverpool, Birmingham and Glasgow all saw headline rents tick upwards during the quarter.

Charles Toogood Principal and Managing Director, National Offices Team

TOTAL TAKE-UP IN Q1

1,872,373 sq ft ▼12%

Down on the 10 year quarterly average

UNDER CONSTRUCTION

4,564,226 sq ft

Skewed towards

City Centre

1,104,849 sq ft

Out-of-town

767,524 sq ft

Glasgow

25%

Leeds

17%

Bristol

15%

HEADLINE RENTS AVERAGE

£33.64 psf

Across all nine cities

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