Overseas investment fuels regional office market

Investment from abroad is fuelling the regional office market. Mat Oakley, head of commercial research, and Clare Bailey, associate director in commercial research, Savills, explore the data

Overseas investment was a key contributor to the regional office markets in H1 2016. It accounted for 47% of £3.8bn investment to the end of July, compared to 29% over the long-term average, as appetite remained strong in the lead up to the UK referendum.

Take-up of office space within the regional markets in H1 matched the record first half set the previous year reaching 4.7m sq ft, which is 11% above average.

The trend is expected to continue to the end of 2016. Full-year take-up is forecast to reach 10.5m sq ft, just shy of the 10.9m sq ft recorded in 2015.

As businesses take stock of their post-Brexit trading environment, 2017 will probably see slightly lower take-up but regional office markets are less exposed to the sectors, such as cross-border financial services, which are most likely to be affected by this changing world.

Availability in the UK regions has fallen 2% from 11.3m sq ft at the end of 2015, with supply now standing at 11.1m sq ft – the lowest level on record. This limited pipeline has led refurbishments to be an attractive alternative over the past 12 months…

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