^{Source: Savills Research}

■ Driven by large Government Property Unit (GPU) deals, the public sector accounted for the highest proportion of total take up at 22% during 2017 (see Graph 2). The serviced office sector rapidly expanded during 2017, with 592,000 sq ft of space taken, accounting for 6% of total take-up and a 172% increase on 2016. We expect more serviced operators to increase activity across the regional markets in 2018.

^{Source: Savills Research}

■ Total availability fell 2% to 30 million sq ft during 2017 (see Graph 3). Grade A availability stands at 10 million sq ft, 65% of which is in the M25 market. Excluding the M25, there is an average of 18 months supply of Grade A space.

^{Source: Savills Research}

■ This activity added pressure to top rents in 2017, which rose by an average of 3.3% across the regional cities and we expect further growth of 1.8% in 2018 (see Table 1).

^{Source: Savills Research}

■ There remains a shortage of development, with only 561,000 sq ft of speculative space expected to complete during 2018, whilst 55% of the total office development set to complete by 2019 is pre-let (see Graph 4).

^{Source: Savills Research}

■ Office investment into the UK regions reached £7.6 billion during 2017, 24% above the level recorded during 2016 and 14% above the five-year average (see Graph 5).

^{Source: Property Data}

■ Overseas investment reached a record £2.8 billion last year, accounting for 37% of the total office investment. This was in part driven by the arrival of Far Eastern investors to the regions, who invested a record £809 million, 29% of the overseas total. Overseas investors have taken advantage of the weaker Sterling and increased their regional exposure since the EU referendum in 2016 (see Graph 6). Another growing trend was local councils' combined £661 million of acquisitions into regional offices during 2017, marking a 96% increase on 2016.

^{Source: Oxford Economics, Property Data}

■ Prime office yields (see Table 1, above) in the UK regions (4.75%) remain highly attractive to the City (4%) and West End (3.25%). Competition for long income will intensify throughout 2018, which we expect will hold prime office yields firm.