The Big Nine
Quarterly review of take-up in the major regional office occupier markets in the UK.
The increase in government restrictions and renewed caution towards office occupation has impacted occupier demand across the Big Nine cities. Transactional activity for Q3 amounted to 767,000 sq ft in the city centre and 546,000 sq ft out-of-town, well below the ten year quarterly average, although there was a noticeable improvement on the previous quarter.
The increase in take-up from Q2 2020 can be attributed largely to several significant long-term commitments to the regional markets, including Baillie Gifford pre-letting 280,000 sq ft at ‘The Haymarket’ in Edinburgh and Babcock taking 132,000 sq ft at Bristol Business Park. In addition, BT has recently agreed a 175,000 sq ft pre-let commitment to Four New Bailey in Manchester, which will fall into Q4 figures. Nevertheless, take-up activity continues to be dominated by sub-2,000 sq ft deals, which made up 57% of deals in Q3 compared to an average of 48% over the past ten years.
Some occupiers are postponing new deals in favour of short-term lease extensions and there are examples of some occupiers downsizing their requirements by up to 30%. As a result, a significant increase in grey space is likely to enter the market over the next few months.