■ The last 12 - 18 months has represented a positive change for the regional office markets, with demand increasing across the majority of key markets, representing a significant growth in take-up and falling supply. Office rents are now returning to growth.

■ The markets predicted to see the biggest year-on-year growth in rents by the end of 2014 are; Edinburgh at 8% and Manchester at 7%, which will largely be driven by a shortage of Grade A stock and improving occupier demand for certain office product.

■ Outside the South we expect to see the biggest growth in Edinburgh at 8% and Manchester at 7%, which will largely be driven by a shortage of Grade A stock and improving occupier demand for certain office product.

■ Over the next five years we expect Manchester, Birmingham, Edinburgh and Leeds will see a growth of 3% per annum. Cardiff, Cambridge, M25 and Glasgow 2% per annum and Bristol 1% growth per annum.

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■ 2014 has continued to see a marked rise in investor interest in UK regional Cities from UK Institutions, Property Companies as well as Overseas Investors. Interest is driven by the improving occupational market, and the yield gap between London and the regions. The lack of supply in London, coupled with the weight of overseas demand means the focus is now firmly on the regional economies, which offer excellent characteristics for both security and potential for growth.

■ London will continue to appeal to investors who are looking for safety and security, as well as those looking for development opportunities. However, the best prospects for capital value growth over the five-year forecast period will be outside the Greater London area.

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■ Tenant demand is recovering in the majority of key regional cities, coupled with a severe under-supply of Grade A space and a very restrained development pipeline, there are now increasing opportunities for developers going forward.

■ The case for speculative development in the UK regional cities is strong. A paucity of existing stock and the significant number of lease events due over the next few years will further fuel demand.

■ Although there is a limited amount of speculative development committed, increasing occupational demand is fuelling potential rental growth and further speculative development activity.

Taken from
Spotlight: Regional Office Market Report - October 2014