Since the beginning of the year there have been various local and regional reports suggesting that we are about to see an upturn in the UK commercial property market. In recent weeks agents in London, Basingstoke, Eastbourne and Leicestershire have all reported increased demand.
Aberdeen is proving attractive to investors
The latest indication that market conditions may be improving comes from Scotland where Aberdeen, Edinburgh and Glasgow all saw increased activity in the second half of 2012. This upturn has been largely driven by the office market where little development has taken place during the recession.
Office take-up in Aberdeen hit a record high of over 830,000 sq ft during 2012, reducing the total of available space to less than 480,000 sq ft. This is expected to lead to a surge of development in the city as investors seek to capitalise on the growing strength of the market.
Derren McRae, of CBRE in Aberdeen, anticipates continuing increased investment as a result of strong covenants in the energy sector and tenants prepared to take out long leases on pre-let developments. This leaves him feeling optimistic about the prospects for the Aberdeen market.
“Compared with other UK regional cities, the genuine prospect of rental growth in prime and secondary assets is also proving attractive to investors,” he said.
Demand in Edinburgh also proved to be encouraging. Take-up during 2012 hit a total of over 773,000 sq ft, the highest figure since 2004. The banking and finance industries were largely responsible for this but there was also strong demand from the customer care and leisure sectors.
Glasgow’s annual total exceeded 374,000 sq ft which was a healthy 13 per cent increase on 2011.
Taken together these reports of increased demand, growing confidence among investors and stalled developments finally getting underway provide grounds for optimism about the prospects of the UK market during 2013. However, until there is a sustained improvement in the economy, this optimism will continue be tempered by a note of caution.
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