research, office market review 2019 - knight frank€¦ · research, office market review 2019 set...
TRANSCRIPT
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
UK CitiesResearch, Office Market Review 2019
Set against a backdrop of political paralysis domestically, office
markets across the UK cities demonstrated resilience in 2019.
Leasing volumes finished the year 8% above the long-term trend
as business change strategy continued to motivate space moves.
Growth of fast-growing tech firms proved a defining factor in market
performance. The technology sector accounted for 25% of space let,
the highest representation on record for the UK regional cities.
Similarly, investor activity defied wavering sentiment, with investment
volumes rising to 7% above the 10-year annual average. Notably,
despite concern derived from Britain’s impending exit from the
EU, foreign investment increased by 10% year-on-year to £1bn
representing 37% of total investment turnover. UK buyers were again
dominant though accounting for 56% of the market. Demand for long
dated secure income was particularly high, with asset management
or forward funding opportunities also keenly sought after.
Notwithstanding any extended caution created by EU trade deal
negotiations, 2020 will be greeted with improved confidence
and optimism. Foremost, digital innovation continues to change
every business and generate new organisations. This will mean
that requirements, held back by the uncertainty, will resurface
as occupiers pursue high quality space and prepare earlier for
upcoming lease events. A picture of tightening supply will welcome
market movers. Development activity is still below the long-term
trend, with 35% of space scheduled for delivery before 2023 already
leased. This market positioning is likely to fuel pre-let enquiries and
support further upward shifts to asking rents.
2 0 1 9 S U M M A R Y
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T ) *
6 , 4 0 0, 3 0 0 8 % A B O V E 1 0 Y E A R AV E R A G E
2 0 1 9 N U M B E R O F D E A L S
1 ,1 7 5H I G H E S T TA K E - U P B Y S E C T O R
2 5 %T M T
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
2 ,0 0 0, 8 0 0 - 24 % B E LO W 1 0 Y E A R AV E R A G E
U N D E R C O N S T R U C T I O N ( S Q F T )
4 , 5 9 5 , 9 0 0 S P E C U L AT I V E
U N D E R C O N S T R U C T I O N U K ( S Q F T )
7, 5 7 9 , 9 0 0 T O TA L
Take-up Last five years, sq ft
Source: Knight Frank Research
6,4
87,
60
0
5,8
84
,30
0
6,9
47,
40
0
6,7
26
,30
0
6,4
00
,30
0
0.0m
4.0m
2.0m
6.0m
8.0m
20192018201720162015
Grade A Availability Last five years, sq ft
Source: Knight Frank Research Source: Knight Frank Research
201920182017201620150.0m
0.5m
1.0m
1.5m
2.0m
2.5m
3.0m
2,4
13,7
00
2,6
64
,70
0
2,4
04
,70
0
2,16
5,10
0
2,0
00
,80
0
*City Centre **Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.UK Cities: Aberdeen, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Manchester, Newcastle, Sheffield
Development Pipeline** Schemes under construction, sq ft
202220212020
Speculative
1,269,000
674,000
2,652,900
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
I N V E S T M E N T V O L U M E S
2 0 1 9 I N V E S T M E N T V O L U M E S ( £ B N )
£ 2 . 7 B N 7 % A B O V E 1 0 Y E A R AV E R A G E
2 0 1 9 N U M B E R O F D E A L S
1 2 3M O S T A C T I V E B U Y E R G R O U P
3 7 % O V E R S E A S
UK InstitutionsUK Property Companies
OverseasPrivate
Purchasers 33%
23%7%
37%
Source: Knight Frank Research
Annual Investor TypeAnnual Investment Volumes £bn
Source: Knight Frank Research
20192018201720162015
£3.3
£2.5
£3.4
£3.4
£2.7
£0
£0.5bn
£1.0bn
£1.5bn
£2.0bn
£2.5bn
£3.0bn
£3.5bn
Prime Annual Yield Net yield, %
Source: Knight Frank Research
20192018201720162015
4.7
5%
5.0
0%
4.7
5%
4.7
5%
4.7
5%
0%
1%
2%
3%
4%
5%
6%
Head of UK Cities Alastair Graham-CampbellPartner, Office Head +44 20 7861 [email protected]
Research Darren MansfieldPartner, Commercial Research+44 20 7861 [email protected]
Bristol Steve OadesPartner, Office Head+44 1179 [email protected]
Birmingham Ashley HudsonPartner, Office Head+44 1212 [email protected]
Glasgow John RaePartner, Office Head+44 1415 [email protected]
Aberdeen Eric ShearerPartner, Office Head+44 1224 [email protected]
Cardiff Matt PhillipsPartner, Office Head+44 2920 [email protected]
Edinburgh Alasdair SteelePartner, Office Head+44 1312 [email protected]
Leeds Henrie WestlakePartner, Office Head+44 1132 [email protected]
Newcastle Peter BowdenPartner, Office Head+44 1915 [email protected]
Sheffield Peter WhiteleyPartner, Office Head+44 1142 [email protected]
EnglandBristolBirminghamLeedsManchesterNewcastle-upon-TyneSheffield
ScotlandAberdeenEdinburghGlasgow
WalesCardiff
UK CITIESClick on a city for a local market review
Manchester David PorterPartner, Office Head+44 1618 [email protected]
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Aberdeen Office MarketResearch, 2019 Review
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
Deepwater House, Prime Four Business Park TAQA Baratani Limited 7 6 ,6 2 0
Aberdeen International Business Park, Building 3 Oceaneering 5 1 , 3 5 6
Prime View, Prime Four Business Park Transocean 2 8 , 2 6 5
Hill of Rubislaw, H1 Citibase 1 7,1 5 9
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T )
5 1 3 , 5 2 5 7 % B E LO W 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
8 6M O S T A C T I V E S E C T O R
4 9 % E N E R GY & U T I L I T I E S
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
6 4 2 ,1 1 5 T O TA L M A R K E T VA C A N C Y R AT E
2 0 %U N D E R C O N S T R U C T I O N ( S Q F T )
5 6 , 74 4 P R E - L E T A N D S P E C U L AT I V E
Take-up Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
40
0,7
23
279
,027 40
2,76
5
38
8,3
90 529
,474
0.0M
0.2M
0.4M
0.6M
Grade A Availability Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
526
,00
0
63
6,29
7
75
3,8
34
64
2,11
5
70
9,0
53
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Prime Rent£ per sq ft
Source: Knight Frank Research
2019
£32.50
2020F
2020F
£32.50
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
202120202019
Speculative
56,744
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
Eric ShearerPartner, Office Head+44 1224 415 [email protected]
Chris Ion
Partner, Capital Markets+44 1224 415 [email protected]
Matthew ParkAssociate, Occupier+44 1224 415 [email protected]
Darren MansfieldPartner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
Sir Ian Wood House, Hareness Road 8 0 6 . 8 2 LCN Capital
Partners HFD Property
Group Limited
Technip FMC, Enterprise Drive, Westhill 2 2 . 4 0 6 . 7 0 Black Sand Real
Estate Investment Blackrock
AB1, Huntly Street 1 3 . 5 0 7. 8 5 UKRO (HONG KONG)
Aberdeen Standard Investments
Atmosphere 1, Prospect Park, Westhill,
Aberdeenshire1 3 . 3 8 8 .6 8 Private Middle
Eastern Aberdeen Standard
Investments
UK Overseas Private
PURCHASERS
84%
16%
Investor Type
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
1 3 9V S 1 0 Y E A R AV E R A G E
- 1 6 %N U M B E R O F D E A L S
8
Y I E L D SP R I M E C I T Y C E N T R E
6 . 5 0 %P R I M E O O T
6 . 7 5 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
3 . 9 0 %
2 0 2 0 O U T L O O K
With more than 513,000 sq ft of
office space transacted in 2019, an
increase of 32% on last year and the
highest annual take-up since the
oil crash of late 2014, confidence is
returning to the commercial property
market in Aberdeen. This is fuelling a
sustained period of recovery for the
occupational markets. Together with
the strength of covenants offered by
many of the oil and gas occupier’s
positively rebounding, greater levels
of investment activity in the early
part of the new decade is expected.
We are already seeing an increased
pool of buyers looking to invest in
Aberdeen across asset classes.
However, a lack of sellers could
temper the volumes transacting.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£89
£19
£99
£14
5
£13
9
£0
£25
£50
£75
£100
£125
£150
Prime Yield Net yield, %
Source: Knight Frank Research
0%
1%
2%
3%
4%
5%
6%
20192018201720162015
5.2
5%
5.5
0%
5.5
0%
5.2
5%
5.2
5%
Source: Knight Frank Research
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Birmingham Office MarketResearch, 2019 Review
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T )
7 8 0,0 9 5 6 % A B O V E 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
1 1 6M O S T A C T I V E S E C T O R
3 0 % B 2 B
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
Platform 21, Stephenson Street Secretary of State (GPA) 1 1 0, 7 8 0
6 Brindleyplace WeWork 9 2 ,6 7 0
Louisa Ryland House, Newhall Street WeWork 8 1 , 2 8 0
One Brindleyplace Commonwealth Games 7 2 , 2 6 1
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
1 2 5 ,0 0 0 T O TA L M A R K E T VA C A N C Y R AT E
6 . 8 %U N D E R C O N S T R U C T I O N ( S Q F T )
2 .1 M P R E - L E T A N D S P E C U L AT I V E
Source: Knight Frank Research
Take-up Last five years, sq ft
Source: Knight Frank Research
0
400,000
200,000
600,000
800,000
1,00,000
20192018201720162015
1,200,000
970
,45
8
69
2,7
29
1,0
05
,072
75
5,13
7
78
0,0
95
Grade A Availability Last five years, sq ft
Source: Knight Frank Research
201920182017201620150
50,000
100,000
150,000
200,000
250,000
12
7,50
0
12
7,50
0
25
0,0
00
22
0,0
00
125
,00
0
Prime Rent£ per sq ft
Source: Knight Frank Research
£36.50£35.00
2019 2020F
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
2021
689,000
2020
Speculative
2022
280,000290,000
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
Ashley HudsonPartner, Office Head+44 121 233 [email protected]
Jamie PhillipsPartner, Occupier+44 121 233 [email protected]
Ben Wisher Partner, Capital Markets+44 121 233 [email protected]
Darren Mansfield Partner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
Mailbox, Commercial St 189 6.50 M7 Real Estate Brockton Capital LLP
Priory Court/ Lewis Building 149 5.60 Gulf Islamic
Investments Legal & General
Property
Church Street, 45 61 5.32 Royal London Asset Man
Aberdeen Standard Invest
Edmund Street, 120 48.75 6.10 Credit Suisse M&G
UK Overseas Private
PURCHASERS
68%
30%
2%
Source: Knight Frank Research
Investor Type
2 0 2 0 O U T L O O K
Activity in 2019 was heavily
blighted by political uncertainty, the
continuing stagnation caused by the
discussion on Brexit and a looming
election. What we have seen since
is a sense of relief and optimism
in the market. The sentiment looks
set to resonate into Birmingham.
Appetite for the city was already
healthy on the back of much
publicised infrastructure projects.
However lack of stock has meant
that the pent up demand wasn’t
being satisfied quickly enough.
We anticipate some sales coming
on the back of major lettings as a
nd when they occur as well as there
being some funding opportunities
to unlock sites.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£ 79
6
£ 3
95
£ 5
99
£ 2
95
£ 6
28
£0
£200
£400
£600
£800
Prime Yield Net yield, %
Source: Knight Frank Research
20192018201720162015
5.0
0%
5.2
5%
4.7
5%
4.7
5%
5.0
0%
0%
1%
2%
3%
4%
5%
6%
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
6 2 8 V S 1 0 Y E A R AV E R A G E
3 8 %N U M B E R O F D E A L S
1 6
Y I E L D SP R I M E C I T Y C E N T R E
5 .0 0 %P R I M E O O T
6 . 2 5 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
5 .0 0 %
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Bristol Office MarketResearch, 2019 Review
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
Assembly BT 2 0 0, 74 2
The Generator Building, Finzels Reach Clockwise Serviced Offices 3 0,6 1 1
Programme Spaces 2 6 , 5 0 0
Temple Point Instant Group 2 3 , 2 3 7
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T )
6 9 3 , 9 0 9 2 6 % A B O V E 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
1 0 7M O S T A C T I V E S E C T O R
4 7 % T M T
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
1 5 , 6 2 1 N E W G R A D E A
T O TA L M A R K E T VA C A N C Y R AT E
4 . 6 %U N D E R C O N S T R U C T I O N ( S Q F T )
2 9 4 , 6 6 3 P R E - L E T A N D S P E C U L AT I V E
Take-up Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
49
0,7
69
78
2,9
38
614
,02
8
53
2,0
85
69
3,9
09
0.0M
0.2M
0.4M
0.6M
0.8M
Grade A Availability* Last five years, sq ft
Source: Knight Frank Research *New Grade A only
20192018201720162015
111
,74
6
51,
721
3,2
72 15
,62
1
15,6
21
0
20,000
40,000
60,000
80,000
100,000
120,000
Prime Rent£ per sq ft
Source: Knight Frank Research
2019
£37.50
2020F
2020F
£39.00
Dates indicate the potential completion date of schemes under construction as at the current reporting period.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
20212020
93,663116,000
2019
Speculative
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
Steve OadesPartner, Office Head+44 117 917 [email protected]
Martin Booth Partner, Office Agency+44 117 917 [email protected]
Nick ThurstonPartner, Capital Markets+44 117 917 [email protected]
Darren MansfieldPartner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
Temple Quay House 7 3 . 4 0 4 .0 0 Alpha Real Capital LLP M&G Real Estate
Kings Orchard, 1 Queen St 3 5 5 .1 5 CCLA Aviva Investors
Hartwell House, 55-61 Victoria St 2 8 .1 5 5 .1 8 Aberdeen
Standard Longwell
Properties
Quayside, Temple Back 2 7. 7 5 6 .1 9 Legal & General UK PF ERGO
UK Overseas Private
PURCHASERS
89%
5%6%
Source: Knight Frank Research
Investor Type
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
3 0 4V S 1 0 Y E A R AV E R A G E
- 9 %N U M B E R O F D E A L S
2 2
Y I E L D SP R I M E C I T Y C E N T R E
5 .0 0 %P R I M E O O T
6 .0 0 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
8 . 9 0 %
2 0 2 0 O U T L O O KConsidering how volatile 2019
was, the Bristol occupational and
investment markets did remarkably
well. Offices saw over 330,000 sq ft
leased up in the last quarter helped
greatly by the BT deal at AXA /
Bellhammer’s The Assembly. Vacancy
rate is close to a record low at 4.6%
within only 92,000 sq ft currently
under construction at Royal London’s
Distillery scheme at Glassfields.
Prime office rents ended the year at
£37.50 psf and we forecast further
growth during 2020. Investment
volumes were up against the average
and overall the market is in good
shape with more buyers than sellers.
Regardless of your political leanings,
the market has reacted positively
to greater certainty around the UK’s
relationship with Europe and some
much needed political stability.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£39
2
£35
0 £39
6
£311
£28
1
£0
£100
£200
£300
£400
Prime Yield Net yield, %
Source: Knight Frank Research
20192018201720162015
5.2
5%
5.2
5%
5.0
0%
4.7
5%
5.0
0%
0%
1%
2%
3%
4%
5%
6%
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Cardiff Office MarketResearch, 2019 Review
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
4 Capital Quarter Sky 3 9, 7 1 4
4 Capital Quarter Optimum Credit 1 8 , 9 1 5
Lambourne House New Directions 1 7,1 3 0
Brunel House Starling Bank 1 4 ,1 3 0
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T )
3 5 6 , 8 8 9 2 9 % B E LO W 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
1 0 0M O S T A C T I V E S E C T O R
4 0 % T M T
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
1 0 3 ,0 3 6T O TA L M A R K E T VA C A N C Y R AT E
9 . 2 %U N D E R C O N S T R U C T I O N ( S Q F T )
3 2 5 , 2 6 0 P R E - L E T A N D S P E C U L AT I V E
Take-up Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
619
,149
68
5,6
40
70
3,9
26
49
9,2
15
35
6,8
89
0
0.1M
0.2M
0.3M
0.4M
0.5M
0.6M
0.7M
0.8M
Grade A Availability Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
87,
764
18
5,4
26
114
,24
7
10
3,4
78
10
3,0
36
0
50,000
100,000
150,000
200,000
Prime Rent£ per sq ft
Source: Knight Frank Research
2019
£25.00
2020F
2020F
£28.00
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
202220212020
Speculative
107,01086,000
132,250
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
Matt PhillipsPartner, Office Head+44 29 2044 [email protected]
Mark Sutton
Partner, Occupier+44 29 2044 [email protected]
Gareth LloydPartner, Capital Markets+44 29 2044 [email protected]
Darren MansfieldPartner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
Crickhowell House 4 7 4 . 5 0 Equitix Private Investor
Capital Quarter, 3 2 7 5 . 9 5 PITCH JR Smart Building Ltd
Park Street 1 0 N /A Undisclosed Undisclosed
Edward House Business Centre 2 . 4 5 N /A Undisclosed Undisclosed
UK Overseas Private
PURCHASERS
56%
13%
31%
Investor Type
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
9 1V S 1 0 Y E A R AV E R A G E
- 3 2 %N U M B E R O F D E A L S
7
Y I E L D SP R I M E C I T Y C E N T R E
5 . 2 5 %P R I M E O O T
7.0 0 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
8 .0 0 %
2 0 2 0 O U T L O O K
City centre supply remains restricted
particularly for prime stock. This
combined with political uncertainty
hindered leasing volumes in 2019.
Grade A supply remains tight with
major refurbishments well timed to
capitalise on larger requirements.
The delivery of this new stock could
inflate prime rents. Additionally, we
expect Grade B rents to increase and
incentives to harden in 2020.
Political paralysis led to a cautionary
stance from investors in 2019.
However with the uncertainty
subsiding, sentiment is improving
unsatisfied demand from both
domestic and international investors
which should lead to investment
volumes in 2020 comfortably
exceeding 2019.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£23
9
£10
7
£28
9
£28
6
£12
8
£0
£50
£100
£150
£200
£250
£300
Prime Yield Net yield, %
Source: Knight Frank Research
20192018201720162015
5.7
5%
5.7
5%
5.5
0%
5.2
5%
5.2
5%
0%
1%
2%
3%
4%
5%
6%
Source: Knight Frank Research
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Edinburgh Office MarketResearch, 2019 Review
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T ) *
3 4 8 , 8 1 9 3 8 % B E LO W 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
1 0 5M O S T A C T I V E S E C T O R
3 7 % T M T
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
George Street* We Work 4 0, 5 8 5
Exchange Crescent Amazon 3 1 , 3 6 4
Apex 2,3, Haymarket Terrace Illuminate Technologies 1 1 , 7 1 3
40 Princes Street Multrees 1 0, 9 7 8
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T ) *
3 5 4 , 4 3 1T O TA L M A R K E T VA C A N C Y R AT E
5 . 7 %U N D E R C O N S T R U C T I O N ( S Q F T )
2 8 1 ,0 0 0 P R E - L E T A N D S P E C U L AT I V E
* Denotes city centre
* Knight Frank involvement
Take-up Last five years, sq ft
Source: Knight Frank Research
0.0M
0.2M
0.4M
0.6M
0.8M
20192018201720162015
68
2,5
40
58
4,19
5 781,8
96
574
,20
5
34
8,8
19
Grade A Availability Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
273
,05
8
26
7,9
62
26
6,9
01
245
,63
8 3
54
,43
1
0.0M
0.1M
0.2M
0.3M
0.4M
Prime Rent£ per sq ft
Source: Knight Frank Research
£36.50£35.50
2019 2020F
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
2021
100,000 112,500
2020
Speculative
2022
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
Alasdair SteelePartner, Office Head+44 131 222 [email protected]
Toby Withall Partner, Commercial Agency+44 131 222 [email protected]
Euan KellyPartner, Capital Markets+44 131 222 [email protected]
Darren MansfieldPartner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
St Andrew Square, 4-8 120 4.45 KanAm Grundinvest Fonds
Standard Life Pooled PPF
Leonardo Innovation Hub* 100 5.91 South Korean
Investors Brockton
Capital LLP
Gyle Square 55.17 5.00 Hyundai Asset Management
Greenridge Regional UK
Exchange Plaza 54 5.30 Client of M&G Real Estate Murray Estates
UK Overseas Private
PURCHASERS
79%
21%
Source: Knight Frank Research
Investor Type
2 0 2 0 O U T L O O K
The office investment market should
continue to improve off the back of
a strong 2019. A stabilising political
outlook should encourage both
foreign and domestic investors that
Edinburgh offices offer attractive and
consistent returns.
In the occupational market, tenants
will have slightly more choice of
Grade A space in the city centre
with 2 major developments due to
complete as well as further stock
returning to the market however, we
still anticipate that prime rents will
increase by the end of the year. We
expect the tech sector within the
city to continue to perform strongly
throughout 2020.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£36
0 £44
6
£411
£28
4
£48
4
£0
£100
£200
£300
£400
£500
Prime Yield Net yield, %
Source: Knight Frank Research
20192018201720162015
5.2
5%
5.2
5%
5.2
5%
4.7
5%
4.7
5%
0%
1%
2%
3%
4%
5%
6%
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
4 8 4A B O V E 1 0 Y E A R AV E R A G E
74 %N U M B E R O F D E A L S
1 5
Y I E L D SP R I M E C I T Y C E N T R E
4 . 7 5 %P R I M E O O T
6 .0 0 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
7. 8 %
* Knight Frank involvement
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Glasgow Office MarketResearch, 2019 Review
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
One Central, Argyle Street JPMC 2 7 2 , 8 5 8
177 Bothwell Street Opus 6 4 , 5 8 6
177 Bothwell Street CYBG (Virgin Money) 4 8 , 7 0 4
191 West George Street Hilton 4 1 ,6 6 5
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T )
8 4 1 , 3 5 7 3 7 % A B O V E 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
1 1 5M O S T A C T I V E S E C T O R
4 9 % F I N A N C E & B A N K I N G
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
6 , 4 4 3 N E W G R A D E A
T O TA L M A R K E T VA C A N C Y R AT E
7. 9 %U N D E R C O N S T R U C T I O N ( S Q F T )
1 . 2 M P R E - L E T A N D S P E C U L AT I V E
Take-up Last five years, sq ft
Source: Knight Frank Research
0
200,000
400,000
600,000
800,000
55
6,5
59
678
,076
62
7,313
96
7,04
5
84
1,3
57
20192018201720162015
1,000,000
Grade A Availability* Last five years, sq ft
Source: Knight Frank Research *New Grade A only
20192018201720162015
417
,46
9
38
6,4
65
61,0
26
6,4
43
33,
35
3
0
100,000
200,000
300,000
400,000
500,000
Prime Rent£ per sq ft
Source: Knight Frank Research
2019
£32.50
2020F
2020F
£34.00
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
20222021
172,860
2020
Speculative
337,131
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
John RaePartner, Office Head+44 141 566 [email protected]
Douglas Binnie Associate, Capital Markets+44 141 566 [email protected]
Colin MackenziePartner, Occupier+44 141 566 [email protected]
Darren MansfieldPartner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
St Vincent Street, 110 4 8 . 4 0 5 . 4 0 South Korean investors Savills IM
St Vincent Street, 123 3 7. 7 5 7. 5 7 Longmead Capital LLP Aviva Investors
Atlantic Quay, 2 2 2 . 2 5 6 . 2 5 Corum Asset Management
Moorfield REF III LP
200 Broomielaw 1 5 .6 0 1 0. 5 9 AM Alpha (German) Aviva
UK Overseas Private
PURCHASERS
89%
5%6%
Investor Type
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
1 9 9V S 1 0 Y E A R AV E R A G E
- 2 0 %N U M B E R O F D E A L S
1 5
Y I E L D SP R I M E C I T Y C E N T R E
5 . 2 5 %P R I M E O O T
6 . 5 0 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
3 . 9 0 %
2 0 2 0 O U T L O O KOccupational take-up was
boosted by a few considerably
large transactions, two of which
were in 177 Bothwell Street, a
speculative scheme currently under
construction. As well as this deal,
others such as Hilton at 191 West
George Street have potentially added
to the pressure larger occupiers
with lease events in 2021/ 2022
will face in finding the right space.
Investor activity paused in 2019 due
to political uncertainty. Transactional
levels suffered as a result finishing
the year 56% less than recorded in
2018. Nonetheless, the sales of 123
St Vincent Street and 110 St Vincent
Street highlighted continued investor
interest in Glasgow. For 2020, clarity
stemming from the UK general
election result will lead to investors
re-engaging with the market and an
improvement to trading numbers.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£34
7
£110
£45
3
£46
8
£19
9
£0
£100
£200
£300
£400
£500
Prime Yield Net yield, %
Source: Knight Frank Research
0%
1%
2%
3%
4%
5%
6%
20192018201720162015
5.2
5%
5.5
0%
5.5
0%
5.2
5%
5.2
5%
Source: Knight Frank Research
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Leeds Office MarketResearch, 2019 Review
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T )
74 4 , 6 2 5 2 9 % A B O V E 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
1 3 2M O S T A C T I V E S E C T O R
5 0 % T M T
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
4 Wellington Place Hestview Limited 1 3 5 , 9 1 5
Central Square Link Asset Services 7 1 , 2 8 8
26 Whitehall Road Sky 3 1 ,1 7 5
1 Whitehall Quay BJSS 3 0, 4 9 2
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
8 5 ,0 0 0 T O TA L M A R K E T VA C A N C Y R AT E
3 . 7 %U N D E R C O N S T R U C T I O N ( S Q F T )
1 ,1 4 4 , 5 0 0 P R E - L E T A N D S P E C U L AT I V E
Take-up Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
68
2,6
81
43
5,0
12
1,0
15,5
05
66
3,2
33
74
4,6
25
0.0M
0.2M
0.4M
0.6M
0.8M
1.0M
1.2M
Grade A Availability Last five years, sq ft
Source: Knight Frank Research
0.0M
0.1M
0.2M
0.3M
0.4M
0.5M
0.6M
0.7M
20192018201720162015
25
0,0
00 44
0,0
00
324
,00
0
35
0,0
00
85
,00
0
Prime Rent£ per sq ft
Source: Knight Frank Research
£34.00£32.00
2019 2020F
2020F
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
2021
92,000
232,500
2020
Speculative
2022
230,000
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
Henrie WestlakePartner, Office Head+44 113 297 [email protected]
Eamon Fox Partner, Occupier+44 113 297 [email protected]
Graham FoxtonPartner, Capital Markets+44 113 297 [email protected]
Darren Mansfield Partner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
Quarry House, Quarry Hill 243 Confidential Legal & General Retire R20 Ltd
Wellington Place, 7-8 211 Confidential Legal & General Pensions MEPC
The Mint, Sweet Street 41 6.50 Gatehouse Bank PLC
Patron Capital Partners
City Walk, 1 19.25 6.90 Undisclosed Aviva Life & Pensions UK
UK Overseas Private
PURCHASERS
90%
10%
Source: Knight Frank Research
Investor Type
2 0 2 0 O U T L O O K
The outlook for 2020 can only be
positive as we hopefully see the
back of a lengthy period of political
uncertainty and a confidence
to transact which would be
welcomed by a frustrated buyer
pool. Occupationally, Leeds has
an unrivalled low level of Grade A
availability for a provincial city and
the market dynamics should make
it as appealing, if not more, than its
counterparts. 2020 will see the end
of some value add business plans.
Quality refurbished assets with good
secure income will come to market
and will require a low maintenance
investor, possibly from overseas
capital. Foreign investment is not likely
to slow down this year and we hope
will be underpinned by good demand
from the UK Institutional market.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£20
5
£175
£12
7
£36
2
£56
1
£0
£100
£200
£300
£400
£500
£600
Prime Yield Net yield, %
Source: Knight Frank Research
20192018201720162015
5.2
5%
5.2
5%
5.2
5%
5.0
0%
5.0
0%
0%
1%
2%
3%
4%
5%
6%
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
5 6 1V S 1 0 Y E A R AV E R A G E
1 4 4 %N U M B E R O F D E A L S
1 7
Y I E L D SP R I M E C I T Y C E N T R E
5 .0 0 %P R I M E O O T
6 . 2 5 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
7.1 0 %
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Manchester Office MarketResearch, 2019 Review
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
125 Deansgate Spaces 1 2 1 , 8 9 2
Enterprise City , St John's WPP 8 2 ,0 0 0
2 New Bailey Square BLM 7 0, 7 8 2
Hyphen WeWork 5 1 ,0 0 0
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T ) *
1 , 4 7 3 , 2 2 2 2 5 % A B O V E 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
2 6 3M O S T A C T I V E S E C T O R
2 3 % B 2 B
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
4 8 0,1 3 5 T O TA L M A R K E T VA C A N C Y R AT E
1 1 . 3 %U N D E R C O N S T R U C T I O N ( S Q F T )
1 , 4 0 5 ,1 6 5 P R E - L E T A N D S P E C U L AT I V E
*City Centre
Take-up Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
1,3
18,2
85
1,3
10,7
92
1,2
18,8
92
1,75
0,5
62
1,4
73,2
22
0.0M
1.0M
0.5M
1.5M
2.0M
Grade A Availability Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
211
,14
2
22
0,0
00
30
6,4
56
20
9,8
16
48
0,13
5
0
100,000
200,000
300,000
400,000
500,000
Prime Rent£ per sq ft
Source: Knight Frank Research
2019
£37.50
2020F
2020F
£40.00
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
202220212020
Speculative
171,16578,000
710,707
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
David PorterPartner, Office Head+44 161 833 [email protected]
Matt Stretton Partner, Capital Markets+44 16 1470 [email protected]
Darren MansfieldPartner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
Spring Gardens, 40 5 2 5 .6 1 Aviva Investors Impax Asset Management
Great Bridgewater St, 70 2 1 . 8 6 . 9 3 Credit Suisse Asset Man
State Street Capital
The Chancery 1 9. 4 6 . 3 0 Topland Group Plc PATRIZIA Immobilien AG
Riverside House 6 . 3 4 . 7 1 L&G Muse
UK Overseas Private
PURCHASERS79%
16%
5%
Source: Knight Frank Research
Investor Type
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
1 4 5V S 1 0 Y E A R AV E R A G E
- 74 %N U M B E R O F D E A L S
1 0
Y I E L D SP R I M E C I T Y C E N T R E
5 .0 0 %P R I M E O O T
5 . 7 5 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
8 .1 0 %
2 0 2 0 O U T L O O K
2020 will see 850,000 sq ft of
new and refurbished grade A
space being delivered across five
buildings. Over 40% of this space
has been pre-let or under offer at
the likes of Circle Square and 2 New
Bailey, with an excess of 400,000
sq ft of named active requirements
looking at this space. With limited
pipeline in 2021 onwards and
further strong occupier demand we
expect to see a continued growth
of headline rents. This positive
occupational outlook combined
with greater market and political
certainty will lead to growing
investment demand and a busier
2020. The weight of capital will
be driven by institutional demand
creating the possibility of prime
yield compression.
Mark Bamber Partner, Office Agency+44 161 833 [email protected]
Prime Yield Net yield, %
Source: Knight Frank Research
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
5.2
5%
5.2
5%
5.2
5%
5.0
0%
5.0
0%
0%
1%
2%
3%
4%
5%
6%
£0
£200
£400
£600
£800
£1,000
£1,200
20192018201720162015
£64
2
£619
£917
£1,0
53
£15
2
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Newcastle Office MarketResearch, 2019 Review
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
Broadacre House Step Change 1 4 ,6 3 8
Mosley Street 26 Mosley Street Ltd 8 ,6 8 3
17 Queens Lane Haines Watts 5 , 4 2 6
Gainsborough House Penspen 5 ,1 5 2
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T ) *
1 1 6 , 2 4 3 4 2 % B E LO W 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
5 0M O S T A C T I V E S E C T O R
2 5 % P R O F E S S I O N A L S E R V I C E S
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
1 2 4 , 9 7 8T O TA L M A R K E T VA C A N C Y R AT E
9 . 7 %U N D E R C O N S T R U C T I O N ( S Q F T )
2 0 6 ,0 0 0 P R E - L E T A N D S P E C U L AT I V E
*City Centre
Take-up Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
26
0,2
14
22
0,0
00
177,8
70
23
6,9
28
116
,24
3
0.0M
0.1M
0.2M
0.3M
Grade A Availability Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
23
4,0
00
173
,28
0
175
,00
0
19
8,15
4
124
,978
0
50,000
100,000
150,000
200,000
250,000
Prime Rent£ per sq ft
Source: Knight Frank Research
2019
£24.50
2020F
2020F
£26.00
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
202220212020
Speculative
100,000 106,000
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
Peter BowdenPartner, Office Head+44 191 594 [email protected]
Patrick Matheson Partner, Occupier+44 191 594 [email protected]
Dickon WoodPartner, Capital Markets+44 191 594 [email protected]
Darren MansfieldPartner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
Quorum Business Park 3 2 7. 7 0 Shelborn Asset Management
Cereberus Capital Management
Grey Street, 52-60 1 2 . 4 5 6 . 4 0 Buccleuch Property M&G Real Estate
Quorum Business Park, Q4 4 .6 8 .0 8 Hurstwood
Group Sisu Properties Ltd
Hadrian House, Higham Pl 4 . 5 1 1 .6 7 Undisclosed UK Land Estates Ltd
UK Overseas Private
PURCHASERS32%
60%
8%
Source: Knight Frank Research
Investor Type
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
5 8V S 1 0 Y E A R AV E R A G E
- 3 4 %N U M B E R O F D E A L S
9
Y I E L D SP R I M E C I T Y C E N T R E
5 . 7 5 %P R I M E O O T
6 . 7 5 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
6 . 9 0 %
2 0 2 0 O U T L O O K
A lack of Grade A availability
combined with political wrangling
restricted leasing activity in the
city core. Demand has built up and
could be realise in 2020 as occupier
confidence solidifies and new stock
comes to market. Examples of this
are already present with several
occupiers committing to space in
the Lumen, the first new build
Grade A office to enter the market
since 2016, as it reaches practical
completion in February.
Although stable in 2019, headline
rents should rise in 2020 to circa
£26.00 per sq ft as the new stock
comes to market. This in turn, will
generate greater interest in the
investment markets. Stock availability
may however, temper activity.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£18
5
£18
1
£50 £6
2
£58
£0
£50
£200
£150
£200
Prime Yield Net yield, %
Source: Knight Frank Research
20192018201720162015
6.0
0%
6.0
0%
5.7
5%
5.7
5%
5.7
5%
0%
1%
2%
3%
4%
5%
6%
Our dashboards provide a concise synopsis of occupier and investor activity in the UK's regional office markets.
knig
htfra
nk.c
om/r
esea
rch
Sheffield Office MarketResearch, 2019 Review
O C C U P I E R D E M A N D
TA K E - U P ( S Q F T )
5 3 1 , 6 1 4 5 8 % A B O V E 1 0 Y E A R AV E R A G E
N U M B E R O F D E A L S
1 0 0M O S T A C T I V E S E C T O R
3 1 % F I N A N C E & B A N K I N G
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y O C C U P I E R S I Z E ( S Q F T )
Grosvenor House HSBC 1 4 0,0 0 0
1 Charter Square CMS 4 7, 5 0 0
38 Carver Street Cubo / Staton Young 3 0,0 0 0
Hallamshire Business Park Twinkl 2 0,0 0 0
O C C U P I E R S U P P LY
G R A D E A AVA I L A B I L I T Y ( S Q F T )
6 4 ,0 0 0 T O TA L M A R K E T VA C A N C Y R AT E
7. 3 2 %U N D E R C O N S T R U C T I O N ( S Q F T )
3 8 8 ,0 0 0 P R E - L E T A N D S P E C U L AT I V E
Take-up Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
49
4,2
83
20
1,5
14 3
93,
712
36
3,5
84
53
1,614
0.0M
0.1M
0.2M
0.3M
0.4M
0.5M
0.6M
Grade A Availability Last five years, sq ft
Source: Knight Frank Research
20192018201720162015
175
,00
0
175
,00
0
15
0,0
00
64
,00
0
80
,00
0
0
50,000
100,000
150,000
200,000
Prime Rent£ per sq ft
Source: Knight Frank Research
£26.00£25.00
2019 2020F
2020F
Dates indicate the potential completion date of schemes under construction as at the current reporting period. Development schemes are inclusive of both new and comprehensive refurbishment.
Development Pipeline Schemes under construction sq ft
Source: Knight Frank Research
2021
110,00087,000
2020
Speculative
2022
Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Important Notice: © Knight Frank LLP 2020 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
Knight Frank Research Reports are available atknightfrank.com/research
We like questions, if you've got one about our research, or would like some property advice, we would love to hear from you.
Peter WhiteleyPartner, Office Head+44 114 241 [email protected]
Ben WhiteAssociate, Occupier+44 114 241 [email protected]
Nick WalesPartner, Capital Markets+44 114 241 [email protected]
Darren Mansfield Partner, Commercial Research+44 20 7861 [email protected]
K E Y T R A N S A C T I O N S 2 0 1 9
P R O P E R T Y P R I C E ( £ M ) Y I E L D ( % ) P U R C H A S E R V E N D O R
Riverside East, Millsands 24.65 6.32 Corum Asset Management
Sidra Capital (Saudi)
Aspect Court, Pond Hill 8.80 6.60 Sheffield Hallam Regional REIT Ltd
Navigation House 3.75 10.36 Undisclosed DownhamProperties
UK Overseas Private
PURCHASERS
26%
74%
Source: Knight Frank Research
Investor Type
2 0 2 0 O U T L O O K
Despite political headwinds, office
take-up in 2019 was almost twice the
5 year average. The market for 2020
is looking equally promising. The
biggest challenge will be placement
of demand. Grade A supply remains
at an all-time low with just over
60,000 sq ft spread over a number
of buildings. As such, any new large
occupier may need to consider D&B
although developers are active in the
city. The Heart of the City II offers
some availability, with work on the
Pepperpot Building (37,000 sq ft)
underway and the final building at
the Digital Campus, Vidrio (60,000
sq ft) yet to start. The opportunity
of existing office space at Pennine
Five delivers up to 235.000 sq ft over
5 buildings and will be an exciting
prospect for the market.
Investment Volumes Last five years, £ millions
Source: Knight Frank Research
20192018201720162015
£17
£83
£54
£15
1
£37
£0
£50
£100
£150
£200
Prime Yield Net yield, %
Source: Knight Frank Research
20192018201720162015
6.5
0%
6.5
0%
6.2
5%
0%
1%
2%
3%
4%
5%
6%
7%
6.0
0%
6.0
0%
I N V E S T M E N T V O L U M E S
I N V E S T M E N T V O L U M E S ( £ M )
3 7V S 1 0 Y E A R AV E R A G E
74 %N U M B E R O F D E A L S
3
Y I E L D SP R I M E C I T Y C E N T R E
6 . 2 5 %P R I M E O O T
8 .0 0 %F O R E C A S T T O TA L R E T U R N 2 0 2 0
6 .1 %