Time for office developers to put their spades in the ground, says Lambert Smith Hampton
Lambert Smith Hampton has identified key locations in the UK where it says developers of office space should start building now, in order to benefit from shortages of stock ‘when the upturn in demand returns in 2014’. The firm says there is only 1m sq ft of speculative development currently underway in the regions and that availability of Grade A office space in key regional locations is therefore set to decline further this year.
The firm’s National Office Market 2011 report has analysed 33 centres across the country and highlights in particular those markets where there is already a below-average proportion of Grade A availability. These centres include Glasgow, Bristol and Cardiff, which it says will be key areas for developers and investors.
Take-up of Grade A space across the UK so far this year has been 35% of the total, which is above the average of 28% for the past five years, the firm notes. LSH says regional office take-up is already set to match last year’s level. Tony Fisher, national head of office agency at LSH, says: “On the face of it availability across the UK stands at 59.7m sq ft, which is 9m sq ft more than the market average. However, only 27% is grade A, and as occupiers shy away from secondary space we could argue that the stock currently available will not be able to fulfil occupier demand.”
Glasgow has the lowest proportion of available Grade A stock at just 15%, LSH says, with relatively little Grade A office space left in Glasgow city centre as occupiers have taken the opportunity this year to acquire prime space on competitive terms – Grade A space has accounted for 40% of total take-up to date this year.
LSH says there is 350,000 sq ft of available Grade A office space in Bristol city centre, with a further 150,000 sq ft in the wider Bristol area. In total, 23% of available stock is Grade A. The firm says these amounts are low compared with other large UK markets such as Birmingham, Manchester, or Leeds.
Cardiff has just 200,000 sq ft of Grade A supply, or 16% of the total, which LSH says equates to six months’ supply at current take-up levels. The firm notes that most of this available Grade A office space is out of town and consists of smaller floorplates, which many occupiers are likely to consider unsuitable for their requirements.
