Market snapshot

Office Market Pulse East Midlands Q2 2013

The East Midlands office market continued its positive start to the year with Q2 take-up totalling 135,438 sq ft; almost 60% of which was transacted in Leicester.

You can download a PDF version of this East Midlands Office Market Pulse, or to read and sign-up to receive Office Market Pulses from other UK centres, click here.

In this issue:

Leicester sees highest office take-up in five years

  • Leicester has seen the highest quarterly take-up in over five years (80,000 sq ft). 65,000 sq ft of this was city centre deals. Enquiry levels also increased, with requirements totalling just over 200,000 sq ft. For a breakdown of current take-up, click here.
  • In contrast, Derby witnessed one of the quietest quarters in the last five years with just half a dozen transactions all below 5,000 sq ft. For a breakdown of current take-up, click here
  • More than 20 transactions completed in Nottingham during Q2; over 80% of which were grade B office space. The only grade A space let comprised two small units at Poplars Court. For a breakdown of current take-up, click here.

Significant occupational transactions Q2 2013

Property Size (sq ft) Landlord (s) Tenant / Purchaser Lease
Hearts of Oak House, Princess Road West 39,100 Exilarch Foundation Leicester City Council 10 year lease with 5 year break option
Wellesley House, Wellington Street         19,439         Mothercare Combined Pension Fund    DeMontfort University     5 year lease
Two Colton Square  12,671 Goodman  Harvey Ingram Shakespeares  10 year lease with 5 year break option

Supply in decline across the region

  • Following Leicester’s higher than average take-up in Q1 and Q2, supply is now at its tightest for both grade A and good quality grade B. This is putting pressure on previous incentive levels enjoyed by tenants over the last four years. For a breakdown of Leicester supply by grade, click here.
  • Derby has over 220,000 sq ft of grade C stock and a limited supply of grade A and B space in the city centre. In contrast, grade A and B accounts for almost 50% of total supply in the out of town market. The majority of availability is within the 20,000 to 50,000 sq ft bracket, with more limited availability in the 10,000 to 20,000 sq ft bracket. With more development in the pipeline at Pride Park, grade A supply is set to increase in the coming year. For a breakdown of Derby supply by grade, click here.
  • Grade A office space accounts for just 10% of Nottingham’s city centre supply and 11% of out of town supply. Out of town grade B stock accounts for 830,000 sq ft (70%) of total supply. A significant amount of grade C space could be classed as obsolete with potential for conversion to alternative uses. For a breakdown of Nottingham supply by grade, click here.

Spotlight on office market as Leicester Office Forum launched

  • Property firms are joining forces with business leaders and the city council to create the Leicester Office Market Forum which is being launched to improve the offices sector and attract new investment and jobs to the city.
  • The move follows the launch of an action plan drawn up after a review of commercial office space by LSH, supported by Warwick Business Management Ltd and PACEC.  
  • Read the Leicester Office Market Review Executive Summary.

Regions see an upturn in investment activity

In the last quarter we have seen a clear shift in sentiment towards regional offices. While the focus of institutional investors remains largely with the 'Big 4,' there has also been an upturn in activity within the wider regional market from property companies and private investors. Recent transactions of note include:

  • 84 Colmore Row, Birmingham- £11.00m (5.8%)
  • Tungsten Building, Blythe Valley- £6.26m (6.94%)
  • Iceni Centre, Warwick- £10.85m (10.6%)
  • Worldwide House, Peterborough- £16.00m (12.70%)

To view our latest UK Investment Transactions (UKIT) report, please click here.

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