Momentum has continued from Q3 2024, with all markets (Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester – the ‘Big Six’) exceeding their Q3 take-up totals in 2023. With requirements continuing to come in, could 2025 see another year of outperformance?

Rise in requirements going into 2025

With continued optimism for the end of the year, the outlook going into 2025 for the regional office market is also positive, with an increase in occupier requirements for new space. At the end of Q3 2024, there were 5.5 million sq ft of office requirements in the Big Six cities, up from 3.9 million sq ft at the end of 2023, an increase of 40%. 

We can also see that some occupiers are now looking to increase office footprints as occupancy continues to improve. Savills research shows that almost three quarters of those who have moved within the same city increased their office size in 2024, compared with just 26% in 2021. However, the way occupiers are utilising their space is different in the post-Covid era, which is now centred around collaboration and communal space, focused on the employee experience. 

Nearly a third of all requirements in the Big Six are for spaces between 10,000-19,999 sq ft, with requirements between 30,000 – 49,999 sq ft making up 17% of the total. There are currently seven requirements in the six cities which total over 100,000 sq ft, which include occupiers within the tech and professional services sectors, with three of these occupiers looking to move in early 2025.

Who are the movers and shakers?

Traditional sectors are continuing to drive the regional office market, with the professional sector currently the largest active seeker of office space within the Big Six, with over 1 million sq ft of requirements. Within this, the legal sector accounts for 34%, totalling 450,000 sq ft. The most active sector for take-up in 2024 was public services, education & health; this has 841,000 sq ft of live requirements, with 55% of these in Birmingham. The tech sector has also been on the rise in 2024, accounting for 17% of total active requirements across the regions, 40% of which are located in Manchester.

Where are occupiers looking?

Birmingham has the largest number of requirements across the Big Six at present, totalling 1.4 million sq ft. This includes 40 occupiers actively seeking new office space, with nearly half of this from the public services, education & health sector, which is expected to continue growing its presence in the city. Manchester and Edinburgh both have over 1 million sq ft of requirements, with the former having a large amount of tech requirements in the market, totalling 454,000 sq ft. Five of these occupiers have a requirement of over 50,000 sq ft, continuing to demonstrate Manchester’s appeal as a regional tech hub.

Squeeze on supply and more caution

However, while requirements are increasing, and occupiers continue their demand for best-in-class space, the lack of high quality, sustainable offices to feed this demand may come to a head in 2025. Currently, all markets in the Big Six have less than two years’ worth of prime supply, and there is less than 900,000 sq ft of prime development under construction in 2025 and 2026.

Looking forward to 2025 and thereafter, while there is optimism for the office market and requirements are increasing in the regions, occupiers remain cautious about making decisions in the wake of the Budget. Due to the potential cost increases for businesses, this is leading to occupiers delaying decisions on office moves or revaluating their office needs going forward.

Further information

Contact Jack Edwards

Market in Minutes: UK Regional Office Investment Market Watch