With 2024 in
full swing, it’s a good time to take stock of the current state of the
commercial office landscape in the North and discuss what’s in store for the
rest of the year ahead.
In this
blog, David Porter – Head of the Manchester Commercial Office for Knight Frank and Vice Chair of British Council
for Offices in the North – offers the lowdown on the region’s thriving office
market.
2023: a mixed bag
According to
Knight Frank’s UK
Cities 2024,
different factors, including economic difficulties, high costs, and conflict
overseas, challenged office market activity in 2023. The result was a broad
decline in office take-up, with investment volumes falling below average.
However,
looking at the North on a city-by-city basis, there were some significant
stand-outs last year:
-
Despite
the second half of the year showing improvement, office take-up in Manchester fell short of the 1m sq. ft.
mark, finishing at 942,000 sq ft. – which is 14% below the five-year annual
average. Manchester saw 221 deals completed against an average of 213; above
the five-year average.
-
Compare
this to Leeds, which experienced
strong occupier demand in 2023, with the city registering the highest level of
annual take-up in four years. A total of 651,461 sq. ft. was acquired, 10%
above the five-year annual average and a 9% year-on-year increase. The number
of deals rose slightly from the previous year: 127 completed, which was 17%
above the five-year annual average.
-
In
Sheffield, occupier activity
increased in 2023, with take-up of 374,120 sq ft. – a 21% increase on the
previous year that was 6% above the 10-year annual average. Despite above
average levels of take-up, just 40% was for grade A space, owing to the lack of
suitable space available in the city.
So, while
the overall outlook for the UK in 2023 wasn’t exceptional, there was definite
cause for optimism, especially in the North – a huge growth area for commercial
development.
It’s now
time to turn our attention to this year, and look forward to a successful year
for the office market.
What’s in store for 2024?
Businesses
will continue to look through a ‘green lens’ when it comes to achieving
environmental goals through their investment in commercial spaces.
ESG
standards, including energy-efficient upgrades and green certifications, are
vital for investors, occupiers and lenders. But according to Knight Frank’s
latest research, approximately 79% of office spaces in the UK fall short of an
EPC B rating, requiring upgrade work to avoid depreciation or obsolescence.
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