Investment in the UK office market reached its highest level in eight years in 2015, according to figures compiled by London-based Lambert Smith Hampton (LSH).
Investment in the UK office market reached its highest level in eight years in 2015, according to figures compiled by London-based Lambert Smith Hampton (LSH).
Total investment was £26 bn (€36.4 bn), with the south-east region reporting the strongest activity. Growing overseas demand for Central London offices resulted in institutions being net sellers in the second half of the year.
Take-up in the occupational market reached a 14-year high of 2.9 million m2. In more than two-thirds of the key office markets, take-up was ahead of the 10-year average, with Manchester (74% above), Edinburgh (+58%), Birmingham (+58%) and Belfast (+54%) the standout performers.
Availability fell by 5% in the course of the year, continuing a downward trend, with grade B and C accounting for the majority of the reduction. LSH reported that a rental growth cycle is well established in the sector, with prime headline rents increasing in 28 out of 41 markets.
In the grade A sector speculative development increased by 3%, offsetting the shortage of supply.
Charlie Lake, capital markets director for LSH, said: ‘As forecast, 2015 witnessed investor confidence returning to the regions, with a wide range of overseas investors and institutions attracted by the higher returns away from Central London.
‘With income growth likely to be a key driver for investment in 2016, it is encouraging to see our agents forecast further prime headline rental growth in 26 of the regional markets.’
