Office occupier markets resilient in 2016 despite Brexit
Regional office occupier markets outside of London and the South East have proven relatively resilient in 2016, despite Brexit, according to analysis from CBRE.
Demand for office space across the UK totalled 5.6 million square feet, a fall of 7% from the 2015 total of six million square feet and 3% below the five year average.
The figures also reveal that take-up activity in the second half of the year, following the referendum on the future of the UK in the European Union result was only 3% lower than the first half of the year.
According to the report worries about the effect of Brexit have not had a significant effect and it points out that the headline figures obscure a mixed pattern of take-up across the UK as some cities fared better than others relative to recent past performance.
Bristol was a particular stand-out market with occupier activity up by nearly 60% from the previous year. Other cities with improved levels of take-up in 2016 includes Glasgow and Liverpool. Manchester, whilst not quite beating its 2015 level still saw strong growth, outperforming its five year average by 16% and ending the year particularly well.
In contrast take-up in cities such as Leeds and Edinburgh struggled to keep up with the very successful years these cities have seen since 2013, whilst Birmingham, although 28% down from 2015, was only marginally below its five year average. Leasing volumes in Aberdeen remain subdued by the low oil price.
The report explains that requirements continue to circulate, so it still remains to be seen the extent to which the Brexit vote will dampen down occupier demand in the regions. However many markets will welcome the timing of the government property unit which has launched a search for a number of hubs in different UK cities, all of which are very large compared to the typical requirements that drive the regional cities.
Emma Jackson, associate director of research for national office markets at CBRE, said: “Occupier data for the full year, on the face of it indicates that concerns about the EU referendum result do not appear to have unduly deterred occupiers from continuing their searches for new space.
“However, for many occupiers, their searches have been initiated due to a forthcoming lease break or expiry so referendum concerns will play little part in their decision relating to office moves.”