Key findings from this year's survey.
- Costs rise ahead of inflation
Across the 54 surveyed locations, the average cost of occupying a new build office in the UK increased by 3.4% over the 12 months to April 2019, accelerating from 2.6% growth in the previous year and running at double the rate of CPI inflation, at 1.8% over the period. The average cost increase was higher still for 20-year old buildings, at 4.3%.
In contrast with previous years, upward movements in headline rents and landlord incentive packages were not the main driver of cost increases. Of the 22 separate cost metrics, the sharpest increases were seen for fit-out, furniture and catering, rising between 6% and 8% over the past year. Meanwhile, other, more day-to-day running costs either broadly tracked or marginally exceeded inflation.
Notably, rental growth played a more significant role in driving the average cost increase for 20-year old buildings. Of the 54 locations, net effective rents increased by 3.3% on average over the year, compared with an average increase of 1.9% for new buildings. This contrasting pattern largely reflects tightening supply of good quality secondhand space across the markets.