The UK commercial property market is suddenly showing new signs of recovery after a turbulent past that culminated in the European financial crisis. In 2014 the market witnessed significant activities in all the market sectors. When matched to the rest of the world, the UK office property market is at the apex of growth and attractiveness. The only thing worrying investors and market watchers is how long the silver lining will last. In November 2014, a respectable real estate firm released a comprehensive report detailing the main trends that will likely drive the UK commercial property market in 2015. Aside from the UK property market, the report also rates key global markets around the world.

Key UK Office Market Trends for 2015

According to the market analysts, predict that 80% of the European markets under the study will undergo a 12 month period of rental growth. Out of the 21 cities, London tops the list, as the best performing office market in Western Europe. According to the report, London will likely to see a boost in occupier demand as a result of positive economic outlook. The other sectors of the economy which are likely to see growth are media, creative and tech sectors. This development is expected to increase the demand for Grade A space in highly preferred rental locations like the West End and beyond. Key sectors of the economy including banking, insurance and finance are also expected to continue in the recovery path, which has been ongoing in the last 12 months. This growth is likely to bring into play, renovated interest in office properties throughout the British capital.

The report predicts that the number of office completions in the UK will remain below the decade’s average, until 2016. This fact will lead to scarcity of prime office floor space in the coming two years. The trend is also likely to lead to an increase in rental growth values over the short term. An overall assessment researchers indicate that, in the period 2014 – 2016, the UK office market will see demand outstrip supply. This scenario will evidently reduce vacancy rates to levels last witnessed in 2008, even as office occupiers move to expand and relocate in secondary locations. The other important development expected in 2015, will be an increase in office space conversions, refurbishments and retrofitting across the UK.

UK Office Market: Global Comparisons

The global marketplace operates in such a way that no property exists in isolation. This means, whatever happens in the global market place is likely to affect the UK office market. Global market indicators can also assist occupiers and investors make wise decisions. Here are some of the most watched global trends, which are expected to have a ripple effect on office property markets across the world. First, the best performing economies in Western Europe are the UK, Romania Hungary and Poland; these markets are expected to lead the way, in terms of office inventory absorption. The rates will range from a high of 18% in Bucharest to 13% in Warsaw. On the other hand, cities such as Istanbul, Bucharest, Prague, and Warsaw are leading way in terms of new office developments, with London, Lisbon, Barcelona and Madrid having the fewest number of upcoming developments.

London has the priciest office space in Europe, where prime rents are expected to move from an average of £127.5 sq/ft/year to £130 sq/ft in 2016. The other European markets that are expected to experience an increase in office rental values are Dublin, Paris, Brussels and Zurich. Across the pond, office markets in the US cities of Boston, Chicago and Atlanta are expected to see strong demand. On the other hand, the New York rental growth will continue to rise unabated until 2016. Investors are, however, persuaded to keep their focus on fast growing emerging markets like Mexico City and Santiago de Chile. Further east, in Asia-Pacific; the most vibrant office markets will be those in Singapore, Manila and Bangkok. In this region, vacancy rates are expected to decline, as the rental growth increase. The other key global markets expected to perform well in this region include Sydney, Shenzhen, New Delhi and Tokyo.

Increasing rate of Office Market trends in Uk vs Western Europe