<p>DRIVERS JONAS LLP – PROPERTY CONSULTANTS
OFFICE TRENDS
2010
UK KEY
CITIES
DJ RESEARCH
EXPECT MORE
www.driversjonas.com/research
Edinburgh
Glasgow
Leeds
Manchester
Birmingham
London City
London
West End
Britain is finally emerging from one of the
gravest and longest periods of economic
decline since the 1930s. The UK property
market has also shown signs of improvement
with rapid yield compression lifting values.
Yields hardened across all of our UK Key
Cities. Transaction activity was led
predominately by a shortage of sellers and
weight of money rather than a large number
of active buyers. London's West End and
Glasgow saw the greatest yield shift over the
last 12 months each moving 125 basis points
(bps) to close the year at 4.75% and 5.75%
respectively. Leeds showed the least
movement, shifting just 25bps and currently
has the highest prime yield of all the Key
Cities at 6.75%.
2009 saw the total value of office investment
transactions rise by 8% across the UK -
the first year we have seen a rise since the
“credit crunch” and subsequent recession
began. The City and West End both recorded
a small rise. Outside London, Glasgow
witnessed the largest increase year-on-year,
up 87%, with £114 million transacting -
however this was from a record low level in
2008. Manchester and Edinburgh saw a
decline in investment levels year-on-year.
As predicted the economic downturn hit the
occupational markets hard last year. Take-up
was poor in all of the regional markets as
occupiers remained cautious and delayed
relocations. Some however took advantage of
the conditions to negotiate more
advantageous lease terms on their current
property. Despite this weakness, office rental
levels fell less than expected with both
Glasgow and Manchester witnessing very little
rental movement (although rent-free incentives
increased substantially across the board).
This report highlights that rental growth is
unlikely to be seen in the regional key city
centres in 2010. Occupier demand is expected
to stay weak and the high levels of Gr