12 December 2016 | Herpreet Kaur Grewal
In its 2015 study, Bilfinger GVA’s Big Nine report, which looks at the office market in nine major regional cities, said take-up was “exceptional” in the final quarter of 2014.
The same firm’s 2016 figures state that the take-up of offices in the same cities – Birmingham, Cardiff, Manchester, Glasgow, Leeds, Edinburgh, Bristol, Newcastle, and Liverpool – had risen to 9.6 million square feet – 20 per cent above the five-year average in the final quarter of 2015.
As the EU referendum ballot approached, real estate firm CBRE said Brexit fears had failed to dent the office market.
But in the aftermath of the vote, office lettings across the ‘big nine’ during the second quarter were 3 per cent below the five-year quarterly average for both the city centre and out of town, according to Bilfinger GVA’s data, as uncertainty caused some occupiers to review their strategies.
Ben Burston, head of UK office and capital markets research at real estate consultancy JLL, told FM World that Brexit had definitely put “a dampener” on the corporate lettings market.
“We have seen in the London office market a much lower level of take-up this year,” says Burston.
“We are seeing businesses being much more cautious, asking landlords for more flexibility and taking longer to make decisions. So effectively there is less demand for office space. We’ve been on a really strong run over the past three years and we are starting to see it slow, particularly in London.”
But Burston says the regional cities have until recently held up quite well.
“We haven’t seen much of an impact there, but there are signs that in the second half of the year take-up won’t be as strong as the first half of the year.”
He adds: “In the near term we have uncertainty and over the next few years we are not going to see the same level of growth.”
That said, Burston adds that a new type of office is emerging that allows for more collaborative spaces and thus better experiences for employees.