Regions outside London are picking up

In 2014, there has been a large pick up in the regional office market. The top five or so regional cities have seen a very strong pick up in leasing activity of around 30% last year. Vacancy rates are low and the development pipeline is very limited at 0.8% of stock so real opportunities for speculative development in the regional cities. 

The regions are definitely starting to improve. The last 2 years there has been a real story about London and the rest with London powering ahead but things are heating up in the regions with investors far more interested in investing outside London this year with a view to capture the beginning of the leasing recovery and the yield gap is also looking very attractive, therefore a lot of investors will be looking for interesting opportunities outside London this year. 

The majority of the investment outside London is from UK institutions and Property Companies accounts for around 75% of the investment activity at the moment. There is starting to be an increase in non-domestic interest outside London, while they dominate London only 25% of investments outside the capital are non-domestic. Investments are from all over the world including mainland Europe and Asia. 

There has recently been a lot more money flowing through the large property investors, for example the retail and life funds who need to spend the capital. It is likely that the volume of investment in the UK will be sustained and because of the strength of the London market a lot more of that money will flow outside London. There is also going to be a lot more development activity outside London as developers react the low development activity at the moment. 

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