Birmingham performed exceptionally well reporting a 165% Q3 YOY increase in take-up driven by two big education deals – Aston University taking 190k sq ft at 10 Woodcock Street and Global Banking School taking 68k sq ft at 1 Brindley Place. The largest deal in Q3 was Bank of New York Mellon taking 197k sq ft at 4 Angel Square in Manchester, which is also the largest deal year to date.

Manchester (23%), Edinburgh (20%), Bristol (12%), Glasgow (8%) and Leeds (6%) also all reported better performance in take-up in Q3 compared to the same period last year. The most active sector in Q3 was Public Services, Education and Healthcare accounting for 30% of total take-up across the Big 6 regional office markets.

Rents continue to face upwards pressure as occupiers seek out and compete for the best office space with Bristol experiencing the largest increase year to date at 13%. Rents in Birmingham (4%), Leeds (3%) and Manchester (2%) also increased over the course of this year.

James Evans, head of national office agency at Savills, says: “The UK regional office market has demonstrated remarkable resilience, with Q3 take-up reaching its highest level since 2018. While these figures are positive, we have noticed a slowdown in enquiries and decision making as we get closer to the Budget.”

Is this the turning point for office investment?

Savills notes that there has been an uptick in investor activity across the regional office investment market with £2.1 billion transacted between Q1-Q3 2024, which was 7% above the same time period in 2023. Activity is still subdued though compared to average levels with volumes 50% below the five year average for the same time period.

Activity in Q3 2024 has picked up with £1.02bn transacted, which was more than double the total recorded in Q2 2024 demonstrating the improved levels of investor sentiment. There were two deals recorded over £100 million being the sale and lease back of Cody Technology and Abcam’s headquarters at Cambridge Biomedical Campus being sold to Danaher Corp.

James Emans, Director, UK investment at Savills, adds: “From an investment standpoint, volumes have been suppressed but we are now getting significantly more traction, which, given the positive occupational metrics, is not surprising. The combination of limited development pipeline and a dwindling supply of Grade A offices supports the projections of continued rental growth across the regional office markets, presenting opportunities for liquid and decisive investors.”