Last year was a good year for office markets outside of London, according to Schroders. Mark Callender, head of real estate research at Schroders, says: “Occupier demand recovered from the hiatus caused by the EU referendum in 2016 and office development remained under control, with completions running at around half their previous peak in 2008-2009 (source CBRE). Furthermore, an increase in residential conversions helped to cut the amount of surplus office space, particularly in southern England.”
As a result, almost all cities saw a fall in vacancy in 2017 (Aberdeen was the main exception) and prime office rents rose in “the Big 6” cities consisting of Birmingham, Bristol, Cambridge, Cardiff, Edinburgh, Oxford and Leeds.
According to Schroders, the government generally plays a bigger role in regional office markets than it does in London, with regards to the amount of office space it leases, although the percentages in certain cities were exaggerated last year (e.g. Cardiff, Leeds) by some large one-off lettings to HMRC, which is consolidating and closing many of its offices in smaller cities and towns.
Also, despite the difficulties of HBOS and RBS during the global financial crisis, Edinburgh remains an important financial centre with strengths in fund management and custodian services. Meanwhile, the tech and media sectors are not only thriving in London, but also outside the capital, the firm reports.