If you’re an occupier looking for Grade A office space in one of the UK’s regional cities this year be prepared not to have your pick of locations, or to have to consider taking refurbished space instead of new, at least for the next few months.

Job creation and more companies relocating from more expensive locations such as London, combined with already low availability, mean that many regional office markets are currently experiencing a shortage in the amount of new space available.

Once again, take-up this year is set to exceed the long-term average. And with occupiers forced to consider refurbished offices instead of new to meet their requirements, rents on good quality refurbished space have risen and are now almost on a par to those for new build in some places – in Leeds, for example, you’ll currently pay only £1 less for refurbished office space (£26 per sq ft) than you will for new space (£27 per sq ft).

But this convergence in rents should be a relatively short-term phenomenon: developers have taken note of high occupier demand and are building accordingly. Speculative development in the regions is up 129 per cent on the same time last year, with approximately 3.5 million sq ft in the pipeline. That sounds like a lot – and it is – but we estimate that 28 per cent of this space has already been pre-let. Nonetheless, sufficient space should come to the market over the next 12 months to allow the distinction between new and refurbished spaces to reassert itself once more through their respective rents.

This isn’t to say that occupiers will be able to bag themselves a bargain. Although the gap in rents for different types of space will widen, ongoing demand is going to push average rents up overall.

Bristol, for example, which is attractive to many occupiers (particularly those in the TMT sector) is set to see a 12 per cent increase in rents by the end of the year – the biggest regional increase – while neighbouring Cardiff can expect rents to rise by nine per cent. Other regions have already experienced significant increases in office rents over the course of 2015 – in Manchester, for example, rents grew by six per cent and in Leeds by five per cent.

The momentum is currently behind the UK’s key regional cities, with businesses and individuals alike attracted by the right blend of working environment, infrastructure investment and a good quality of life, while simultaneously repelled by rising costs elsewhere. This momentum will be reflected in the regional office markets: 2016 is set to be a busy year.

Further information

Read more on regional office rent rises or contact Savills Office & Business Space