National occupier overview

Take-up reached 1.6m sq ft in the second quarter of the year, a 25% decrease in demand since the first quarter. However, boosted by a strong Q1, H1 take-up stood at 3.7m sq ft to represent the strongest half year since 2019 and 6% ahead of the 10-year average. Cities significantly outperforming the 10-year H1 average include Bristol (21%), Manchester (27%) and Newcastle (37%). Indeed, these cities saw the largest deals in Q2, the largest of which was at 100A Bristol Business Park where Rolls Royce took an 87,600 sq ft sublease.

The out of town market continues to gain momentum. City centre locations continue to suffer from a chronic lack of Grade A space – particularly of larger floor plates – and, as a result, some occupiers with larger requirements are looking in out of town markets. So far this year, six of the 10 largest deals have been outside the city centre, compared with last year where all top 10 deals took place in city centre locations.

Fortunately for occupiers focused on city centre locations, the Q2 Grade A vacancy rate saw a marginal increase from 2.0% to 2.2% driven by completions filtering through to supply. 2.1m sq ft of deliveries are forecasted across the Big Nine this year, 49% of which are already pre-let.

Prime rental growth continued despite this increase in vacancy, with quarterly rental growth of 0.9% recorded across the Big Nine. This was driven by prime rents hitting £45.50 per sq ft in Birmingham and £49.00 per sq ft in Bristol, representing quarterly increases of 5.2% and 2.1% respectively. Occupiers continue to be drawn to best in-class developments with strong sustainability and wellbeing credentials like Three Chamberlain Square, Birmingham, which has attracted global occupiers including EY, CBRE, and Forvis Mazars.