Latest research shows take-up of space in UK business parks hit a nine-year high in the second half of 2014, amounting to 3.2m square feet.
The report by Bilfinger GVA’s latest research found the figure was the highest six-monthly total since the biannual survey started in 1996, even surpassing the levels of take-up seen during the dot.com boom of 2000.
Two large pre-let deals in Aberdeen as well as continued buoyant demand in the South East were the main drivers of the uplift, but activity in most regions was recorded as being well above five-yearly six-monthly averages.
In the North East, Cobalt Business Park took the spoils with two large deals during the period – namely 77,000sqft to Utilitywise and 40,000sqft to Siemens – but healthy activity was also seen at Doxford Park and Fifth Avenue Business Park, Team Valley.
An improvement in the market has also been seen at Quorum, with quoting rents increasing to £16 per square foot.
National head of offices Carl Potter said: “The level of take-up has been increasing in the regions’ out-of-town markets for some time, reflecting a well-balanced recovery both in city centres and outlying districts.
“However, for take-up levels within the business parks market to surpass all previous records, including the dotcom boom years of 2000 and the asset bubble leading up to 2008, is quite astounding.”
“What we now have is clear evidence of continued and consistent demand, but with low levels of new construction continuing – the vast majority of which is pre-committed.
“This will lead to a supply shortage. Does this mean we are about to see the return of a speculative development cycle? With the exception of a few select areas, we think this is highly unlikely. Owners will make their holdings sweat more, vacancies are being let aggressively and income returns are very positive, but until there is a sharp increase in the ability to achieve leases of an institutional length then we may well see more significant reductions in availability and some real pressure for rental growth.”
“This is a very different cycle than we have seen for a number of years – more akin to the growth experienced in the late 1980s, with some significant levels of occupier demand, rather than the period running up to 2008 when it seemed everyone wanted to own regional office buildings in out-of-town locations but no one wanted to occupy them.”