BCO North: commercial office market predictions 2024

In this blog, David Porter – Head of the Manchester Commercial Office for Knight Frank and Vice Chair of British Council for Offices in the North – offers the lowdown on the region’s thriving office market.

2023: a mixed bag

According to Knight Frank’s UK Cities 2024, different factors, including economic difficulties, high costs, and conflict overseas, challenged office market activity in 2023. The result was a broad decline in office take-up, with investment volumes falling below average.

However, looking at the North on a city-by-city basis, there were some significant stand-outs last year:

• Despite the second half of the year showing improvement, office take-up in Manchester fell short of the 1m sq. ft. mark, finishing at 942,000 sq ft. – which is 14% below the five-year annual average. Manchester saw 221 deals completed against an average of 213; above the five-year average.
• Compare this to Leeds, which experienced strong occupier demand in 2023, with the city registering the highest level of annual take-up in four years. A total of 651,461 sq. ft. was acquired, 10% above the five-year annual average and a 9% year-on-year increase. The number of deals rose slightly from the previous year: 127 completed, which was 17% above the five-year annual average.
• In Sheffield, occupier activity increased in 2023, with take-up of 374,120 sq ft. – a 21% increase on the previous year that was 6% above the 10-year annual average. Despite above average levels of take-up, just 40% was for grade A space, owing to the lack of suitable space available in the city.

So, while the overall outlook for the UK in 2023 wasn’t exceptional, there was definite cause for optimism, especially in the North – a huge growth area for commercial development.

It’s now time to turn our attention to this year, and look forward to a successful year for the office market.

What’s in store for 2024?

Businesses will continue to look through a ‘green lens’ when it comes to achieving environmental goals through their investment in commercial spaces.

ESG standards, including energy-efficient upgrades and green certifications, are vital for investors, occupiers and lenders. But according to Knight Frank’s latest research, approximately 79% of office spaces in the UK fall short of an EPC B rating, requiring upgrade work to avoid depreciation or obsolescence.