Market snapshot

Office Market Pulse East Midlands Q4 2014

The East Midlands office market saw strong overall performance during 2014, with increased take-up effecting a return to yearly averages for Nottingham and Derby, and the number of transactions in Leicester going from strength to strength.

With continued shortage of primes stock across the region, and mounting occupier demand for speculative development, 2015 promises to be an interesting year with schemes such as Watermead, Leicester, and Pride Park, Derby, set to complete.

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In this issue:

Nottingham sees most active quarter of the year in Q4

The Leicester office market saw continued improvement in the second half of 2014 with transactions for Q3 and Q4 totalling 30 and 19 respectively. Following a very strong Q3 take-up of 128,000 sq ft, Q4 take-up dropped to 61,000 sq ft due partly to seasonal fluctuation. Interestingly, Q4 saw far more out of town transactions with 79% recorded compared to 21% in the city centre. For a breakdown of Leicester take-up, click here.

Q4 2014 proved to be the most active quarter of the year for Nottingham's office market with take-up exceeding 122,000 sq ft. This strong finish to the year also helped the city reach total annual take-up of just under 370,000 sq ft which is broadly in line with the yearly average. Although this was around 12% down on 2013's annual office take-up, the balance between city centre and out of town transactions was redressed; office take-up was heavily weighted towards out of town in 2013 whereas 2014 saw a more even spread with the city centre just tipping the balance. For a breakdown of Nottingham take-up, click here.

Derby also saw a return to the annual average with total office take-up reaching a fraction under 150,000 sq ft. Take-up for Q4 was fairly modest at just under 30,000 sq ft, but demonstrates the lack of quality office stock in and around the city; Pride Park, the scene of much of Derby's activity over the past 10 years, now has less than 3% available. Like Nottingham, total annual take-up was down 11% on 2013 however, active requirements have increased. For a breakdown of Derby take-up, click here.

Significant occupational transactions Q4 2014


Size (sq ft)

Landlord/ Vendor Tenant/ Purchaser Lease information
Castle Wharf, Nottingham




15 year lease, £15.00 per sq ft

Grove Park
J21 Leicester


Grove Park Commercial Travis Perkins 15 year lease
1 Bede Island Road, Leicester


Charities Property Fund Newtons 4th Sold at £2.3m
2 Roundhouse Road, Derby


Derby College Interfleet Technology 10 year lease

Acute shortage of grade A supply

Office market supply remains extremely tight in Leicester with both city centre and out of town markets seeing a shortage of grade A and good quality second-hand space across all size ranges. Marlborough Properties' scheme at Watermead - on target for completion in June 2015 - will provide a welcome boost to out of town supply. In the city centre, remaining prime space at Colton Square has received strong interest, and news on further new build space in the city with the development at Welford Place, the site of the former Leicester City Council at New Walk, is eagerly anticipated. For a breakdown of Leicester supply by grade, click here.

The Nottingham office market remains awash with sub-standard office space, much of which continues to be considered for alternative use. Almost 2m sq ft of office stock is available across the city centre and out of town markets. Nottingham has only 133,000 sq ft of available grade A office space (including the Nottingham One development, yet to be completed), representing less than 7% of total stock. No new offices have been built in the city for several years, but despite increasing pressure on supply and occupier demand for prime space, developers remain nervous given the vast amount of secondary stock still on the market (albeit much of which does not meet occupier requirements). For a breakdown of Nottingham supply by grade, click here.

Derby faces an acute shortage of office supply with just one new grade A office building available; One Friar Gate Square. With Pride Park now reaching completion, there is increasing pressure for new opportunities to satisfy occupier demand. A number of sites have planning consent for office development, but with Friar Gate Square remaining vacant for over three years, the need for further space has been questioned. However, market sentiment indicates that the location of Friar Gate Square is not suited for many occupiers who seek either a Pride Park address, and/or closer proximity to the train station. For a breakdown of Derby supply by grade, click here.

2014 market round-up

The Leicester office market has certainly shown its potential this year with annual take-up at approximately 550,000 sq ft; a massive increase on the 276,000 sq ft total seen in 2013. Inward investment enquiries increased in the second half of the year which bodes well for some significant lettings in the year ahead.

Nottingham saw a welcome return to activity in the city centre during 2014, with an 11% increase in take-up. The city council is in discussions to take space at one of a selection of development sites that would support additional speculative office development as we head into 2015.

Derby has just two sizeable plots available at Pride Park, providing approximately 70,000 sq ft of new space; currently on pre-let terms. Demand remains focused on refurbished grade B office buildings offering close proximity to Derby train station.

Record quarter for UK property investment

Investment in the UK commercial property sector totalled £20.5bn in the final quarter of 2014 – a 26% increase on the previous quarter and the highest quarterly performance on record.

The latest edition of our UK Investment Transactions report reveals that investment in the regions increased by 41% to £21.1bn for the year as a whole – the second highest figure on record.  This is the primarily the result of the resurgence of UK institutional investors – which increased inflows by almost 30% in 2014 – buoyed by improving economic sentiment beyond the capital.

In the East Midlands, total investment during 2014 reached £1,969 million compared to £1,281 million in 2013 – an increase of 54%.

Read our latest UK Investment Transactions (UKIT) report here.


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Jane Taylor
Director - Office Agency

0116 255 2694

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