The level of investment in UK office spaces outside of London has hit a six-year high, according to the latest figures released by Knight Frank, which show there has been a real sentiment for purchase outside the capital. Throughout the final quarter of 2013, investment in the commercial property market in regional areas hit £1.63 billion, the report from Knight Frank stated. It said that this was down to the increase in fund receipts since last summer.
Another driver of growth in the regional markets has been the fact that offices in the regional areas of the UK offer better value for money to investors, helping them to achieve better yields for a lower entry price than in the south-east and London. It said that with clear improvements in the occupier market, investors of all types were being drawn by the fact they can get more for their money in the regions outside London.
According to the report, take up across the ten regional cities throughout 2013 was at its highest level since 2008 - it now sits at a level that is four per cent ahead of the ten year average, with Leeds in particular having seen a strong year. Bristol, Glasgow and Newcastle all saw stronger years than at any time since 2008, but Leeds topped them all with take up reaching a record level 58 per cent above the ten year average. However, while there were real positives across the market at the moment, Knight Frank also said that prices are being driven up by a shortage in top-quality stock at the moment.
"With occupier confidence improving and developers remaining wary of undertaking speculative development, the falling availability of Grade A supply is now a key theme across the regional markets," said David Porter, Knight Frank partner, leasing and development. "Overall, Grade A supply has more than halved from its peak in 2009. The situation is arguably most acute in Leeds, although supply in Birmingham and Manchester is also under pressure in view of the high number of lease events in the pipeline," he added.
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- Monday 17 February 2014