Good offices incentives still available for now in regional centres – JLL
Rent levels for available office space in the UK are rising, says Jones Lang LaSalle. While occupiers can still obtain good incentives in some regional centres, the window of opportunity is expected to close as the lack of speculative new development means that supply is set to reduce further overall.
The firm’s latest research into the sector shows that more markets are recording higher achievable office rents (the highest likely to be achieved in each location). In the year since March 2010, 26% of the centres it monitors have seen an increase in achievable office rents. This compares with 8% of centres in 2010 that experienced rental growth, JLL says. “Office rents have stabilised in over half of the property markets analysed, including the major regional centres of Leeds and Liverpool, where levels have remained unchanged since March 2010,” the firm adds.
Year-on-year office rental growth was strongest in the year since March 2010 in Glasgow (3.8%), Birmingham (3.6%) and Manchester (1.8%). This year, Jones Lang LaSalle expects to see an average of 0.7% rental growth in prime office rents in Birmingham, Manchester, Leeds, Edinburgh, Glasgow and the Western Corridor region, but it points out that this is likely to be the result of reduced Grade A space available rather than a rebound in occupier demand.
Incentives offered by landlords have stabilised in about 35% of the markets that JLL covers in its research, and have started to harden in some locations. Average rent-free periods in Edinburgh, Newcastle, Bristol and Cambridge have fallen, amongst others, the firm says. But occupiers can still enjoy “substantial” cost savings in many regional centres, with year-on-year incentives for available office space currently the most generous in Doncaster, Middlesbrough and Hull. Rent-free periods are 24 months or more in about half of the centres the firm monitors. In the North West they average around 30 months.
James Finnis, director in the firm’s National Offices team, said: “Looking at current achievable rental levels, a number of UK regional markets, including Staines, Slough, Uxbridge and Norwich, still remain some way below their long-term average. We anticipate, because of this, that these locations could represent opportunities for further potential growth stories over the short term.”
