Featured Sector: Offices

UK office development has been on a firm trend of growth over the last two years, with a 12% rise in the value of underlying project starts in 2013 following a 39% rise in 2012.

London continues to be the key driver of the office sector; the capital has remained an attractive location for overseas investors looking to buy into relatively high yielding assets such as large office developments. However 2013 also saw domestic investment into the capital increase; as global economic markets calm, overseas and domestic investors are searching for higher returns rather than just safe havens.

This has pushed investors into looking to strong regional cities in search of higher returns, while improving business activity and five years of little development are pushing down vacancy rates in the larger UK cities, increasing the attractiveness of speculative developments. Therefore while London development activity will remain positive, we suspect development in the South East, Manchester, Leeds and the Scottish cities of Aberdeen, Edinburgh and Glasgow will support growth over 2014.

We therefore expect activity in the sector to continue to pick up in line with an improvement in general economic conditions through 2014.