It’s that time of the year again. The sun is shining (sort of), school’s out and the property industry is putting its collective ‘out of office’ on and readying itself for a bit of R&R - and a sharp tail-off in deal activity.
Of course, it’s all relative. Last year, the fall-off didn’t seem that acute, possibly because we were coming off a lower base. This summer, on the other hand, things could well appear quieter than they actually are after the frenetic activity of the second quarter, at least when it comes to office take up in the regions.
Bilfinger GVA’s Big Nine review of the regional office occupier market reveals that in the second quarter, take-up across the nine largest regional cities reached the highest level since the downturn. Encouragingly, there is a difference between what we’re witnessing now and what we saw during the last boom. Then, increases in capital value were not underpinned by occupier demand. Now, they are. More to the point, while there have been some big headline-grabbing deals, most of the take-up reflects solid, low-level demand in the 10,000-15,000 sq ft range - in short, the foundations for further growth look sound.
Chief executive Rob Bould is certainly bullish. “Regional rents tend to step up rather than have a smooth rental growth curve - we are definitely in a step-up period,” he observes. “With the demand for real assets and associated liquidity, it looks like we will be walking in the sunshine for some time.”
In sharp contrast, dark clouds are looming over the London office market. The latest research from Colliers International shows West End office vacancy is at a historic low of 3% and warns that if the government extends permitted development rights, it could dwindle further - as demand soars. Depressingly for those who oppose the extension, news the government has delayed the move looks little more than a stay of execution.
While we’re on the subject of interesting research, you wait ages for a bus and all that… Cushman & Wakefield’s latest European Real Estate Loan Sales Market report is well worth a read and one figure in particular jumps out. There is currently €74bn worth of real estate on the market in Europe. That’s the highest level since records began and possibly the strongest sign yet that we’re at the top of the market as investors seek to cash in on the recent boom years. Does this mean we’re heading for a downturn? Not necessarily, but the market could well be levelling out.
Residential evolution
The same could be said of residential, certainly in the prime London market. But the outlook is far from uniform across the country, which is why it pays to have the latest news, views and analysis at your fingertips - and now you can. Last Thursday, we launched our weekly Residential Newsletter email alert, a round-up of everything you need to know about the residential sector. Sign up here to stay ahead of the pack.
No comments yet