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UK office markets predicted to pick up in 2015

Although regional office markets in the UK have seen subdued rental growth in the past few years, the broadening economic recovery is feeding through to improved occupier demand according to Knight Frank.

This is mainly due to the diminishing availability of Grade A stock and a lack of significant speculative development completions over the past few years which is driving rental growth across the regions.

Louisa Rickard, associate, commercial research, Knight Frank, said: “As economic growth spreads to the regions we expect to see prime office rents rise across regional city centres in 2015. Lack of supply at the prime end of the market will add further upward pressure on both prime and secondary rental growth"

Strong rental growth in the majority of regional city centres over the next 12 months is expected, with new development completions securing higher prime rental levels.

Manchester, Birmingham, Newcastle and Aberdeen should see the strongest growth while all other centres, with the exception of Sheffield, will see positive growth. With prime headline rents in Manchester and Aberdeen are expected to reach record highs of £34 per sq ft by the end of 2015, representing corresponding increases of 10% and 6% over the year.

Birmingham offices should see rents rise by 8% to a seven year high of £32 per sq ft. Sheffield rents are not expected to rise in 2015 but will increase more sharply up to £22 per sq ft by the end of 2016.

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