According to the biannual survey from Bilfinger GVA, take-up on UK business parks saw a healthy increase in the second half of 2014. At 3.2 million sq ft, it was the highest six monthly total since 1996.
The combination of high demand in the South East and two recent large pre-lets in Aberdeen, is the main reason for the increase. At the end of 2014, availability of space fell to 15.7m sq ft, compared to 2012’s 16.2m sq ft.
Also, vacancy rates saw a fall in the last six months of 2014 to 16.2 per cent, compared with June of the same year when the figure stood at at 16.9 per cent.
Construction activity has seen an increase over the past four surveys taken, with over 2m sq ft at the end of last year. Its lowest ever recorded figure was two years ago which saw just 470,000 sq ft under construction.
Carl Potter, senior director and National Head of Offices at Bilfinger GVA commented: “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”.
Mr Potter goes on to say that it will lead to a supply shortage, but says it is highly unlikely that a speculative development cycle will return on a major scale.
“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 rental growth,” he explained.
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