Property: Recovery underway for UK offices, but for some centres the return to growth will be slow

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King Sturge is releasing the 10th edition of its annual UK Office Property Markets report. The survey covers 20 key UK locations, providing a review of the past year’s activity and predictions for each regional market. In the report King Sturge’s in-house Research team provides city-specific data for office rents and take-up together with investment analysis and commentary from the firm’s regional network.

We are witnessing a two-speed recovery

King Sturge is releasing the 10th edition of its annual UK Office Property Markets report. The survey covers 20 key UK locations, providing a review of the past year’s activity and predictions for each regional market. In the report King Sturge’s in-house Research team provides city-specific data for office rents and take-up together with investment analysis and commentary from the firm’s regional network.

Recovery underway for UK offices, but for some centres the return to growth will be slow

After a very difficult period, UK office markets showed an improvement in the second half of 2009. Despite a deeper economic recession than in the early 1990s, the office downturn is likely to be less deep and prolonged this time. Nonetheless, recovery is set to be uneven, with central London re-emerging this year, and some regional centres much slower to return to growth.

The recovery that is taking place in office occupier markets brings a range of challenges and opportunities:

  •     It remains a tenant’s market. Occupiers face the widest choice and the most attractive rents and incentives for years, though signs of recovery suggest that this may not last for long.
  •     The performance gap between the capital and the rest of the country will widen in the upturn, with central London experiencing the earliest reversal of fortunes and leading the office market in 2010, driven by the financial sector.
  •     Demand will remain under pressure outside of London as these markets are more exposed to the public sector squeeze, though central government relocations and bank de-mergers could still provide opportunities.
  •     The worst of the fall in office rents is over. London is likely to be the only market to see prime rental growth in 2010, though it will be several years before recent declines (of -35% on average) are reversed. In the regions, the correction has been milder (at -10%) and growth will take longer to return.

“We are witnessing a two-speed recovery” comments Andrew Burrell, Office Research Partner, “The capital’s specialisation in high-value-added, globally-traded services means its economy is more volatile than the rest of the UK, but it also ensures it grows more rapidly over the cycle. So after a deep trough, the rebound in London offices is most vigorous”.

He added, “Outside of London, take-up was led by the public sector in 2009. This trend cannot continue post-election, as the new government is forced to slash spending. Larger cities with diverse occupier bases, such as Bristol and Manchester, remain best placed for recovery - others may struggle”.

King Sturge is releasing the 10th edition of its annual UK Office Property Markets report. The survey covers 20 key UK locations, providing a review of the past year’s activity and predictions for each regional market. In the report King Sturge’s in-house Research team provides city-specific data for office rents and take-up together with investment analysis and commentary from the firm’s regional network.

To download a copy of the report go to:
http://eu.vocuspr.com/ViewAttachment.aspx?EID=b6mhcA1OnTooIV9V8g%2bu%2bjufIWHrY7LKaY5ImdLacVc%3d

Notes to Editor:

King Sturge is one of the largest international property consultancies in Europe. In the UK King Sturge owns 22 offices and in Continental Europe it operates 20 offices in 13 countries. Together they form part a worldwide network of over 215 wholly owned and associate offices in 47 countries. Over 3,800 staff throughout these offices cover all property sectors and specialisms including plant and machinery, and residential.

In Europe, King Sturge operates in the major UK commercial centres and principal mainland European cities. In Asia Pacific, the firm has associations in Australia, Indonesia, Malaysia and New Zealand. In the Americas, King Sturge has business partners in North, Central and South America through King Sturge CORFAC International and ChainLinks Retail Advisors.

Through a joint venture with a wealth manager, King Sturge now has a presence in the Middle East. The office will initially be based in Dubai, concentrating on states in the Gulf Corporation Council: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

NEWS RELEASE: NR314

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Regis Jacquemin
King Sturge
44 (0) 20 7087 5120
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Andrew Burrell
King Sturge
44 (0) 20 7087 5510
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