After a difficult few years, the UK commercial office market has experienced a strong bounce-back in output in the last two years, as both business and consumer confidence began to return, according to a new report by AMA Research.
Commercial Office Construction Market Report – UK 2015-2019 Analysis says that demand has increased across London and many key regional cities, representing a significant growth in take-up and falling supply, and office rents are now also returning to growth.
The offices sector was particularly hard hit by the downturn, with funding severely restricted and a shrinking development pipeline leading to a significant decline in output and new orders. However, the last 18 months have seen renewed demand intensifying across the UK office market, leading to a growth in construction output by 13% in 2014 to reach £8.7bn.
As a result of improved market conditions, total take-up for 2014 was estimated to be the highest since 2007 and highlights a return to growth for the office market as a whole. In addition, a sustained recovery in the central London office market in 2014 saw take-up at its highest annual rate since 2001 and all London markets have seen increased occupier demand over the last 12 months.
The outlook over the next four years to 2019 remains buoyant for the commercial office construction market driven by an acute lack of existing stock across many cities, increased demand for space from occupiers and a significant number of lease expiries due over the next few years, which will further fuel demand.
Going forward, prospects for office construction output are on the rise, with London and the South East leading the recovery and, given the nationwide strength in demand, it is expected that output in the commercial offices market will continue to grow by between 6-8% per annum over the next few years.
Commercial Office Construction Market Report – UK 2015-2019 Analysis report is published by AMA Research and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.