UK Office Real Estate Market Size
|Study Period||2018- 2028|
|Base Year For Estimation||2022|
|Forecast Data Period||2023 - 2028|
|Historical Data Period||2018 - 2021|
|CAGR||> 6.00 %|
*Disclaimer: Major Players sorted in no particular order
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UK Office Real Estate Market Analysis
The Office Real Estate Market in the United Kingdom is expected to register a CAGR of more than 6% during the forecast period.
- The recent improvement in economic data and the subsequent reopening of the economy have improved the outlook for the office real estate sector.Leasing momentum is back as most offices are safely implementing return-to-work. Inquiries have picked up around city centers, and so has the leasing activity. The IT and ITeS sectors are among the prime drivers of overall leasing activity in the top cities, and bulk hiring by these firms will influence demand for large, quality office spaces.
- COVID-19 had a mixed impact on the office real estate market in the United Kingdom, including its services. Real estate was badly hit by the COVID-19 pandemic, with a sharp decline in values across all markets and sectors. The office real estate take-up was below normal due to the flexibility given to employees (working from home) by the companies. The lockdown measures have forced millions of people to work from home, and on the other hand, the short-term nature of contracts has left offices with very low occupancy across the United Kingdom.
- The uncertainty surrounding Brexit had already eroded confidence in the United Kingdom office property market. Although Brexit has been sharply put into perspective, leaving the European Union has not helped the United Kingdom address severe labor and material shortages as well as crippling supply chain issues. Since the pandemic began, occupants, for example, have been increasingly renewing their office spaces. Occupants are looking to be in new-generation offices with modern amenities and a focus on health and wellness.
UK Office Real Estate Market Trends
This section covers the major market trends shaping the UK Office Real Estate Market according to our research experts:
Declining Vacancy Rates and Increasing Rents of Office Spaces in London
The Greater London and South East office market experienced a resurgence in demand in 2021, following the lower take-up recorded in 2020 as a result of lockdowns.Take-up reached 3.5 million sq ft, which reflected a 46% and 12% increase in the take-up recorded in 2020 and 2019, respectively. The transactional activity was only 2% below pre-COVID-19 levels, illustrating the healthy levels of occupier activity in the market. The Western Sector was the most active geographical region in 2021, accounting for 45% of total take-up.
Several large companies deciding to stay in the area for the long term gave the market a boost of confidence. This included Unilever, ITV, and Intercontinental Hotels Group, which all leased over 50,000 square feet in 2021. There were ten deals recorded over 50,000 sq ft, which was the highest total since 2018 and the second highest quantum in the last five years. Notable transactions in Q4 2021 included Skanska leasing 67,000 sq ft at Leavesden Park, Watford.
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Decrease in office real estate investment volume in the United Kingdom
Office real estate used to make up most of the commercial property investment market in the UK, but since the coronavirus (COVID-19) pandemic started, investors have been more interested in industrial real estate. With the eCommerce sector growing and supply chain management becoming more important than ever, so has the industrial and logistics sector. This rise in importance is also seen in the occupier market, where the number of new tenants has been higher than the 10-year average for the past three years in a row.
In the UK, the number of commercial real estate investments has changed over the past few years. Because of the coronavirus (COVID-19) crisis, investment activity slowed down a lot in the second quarter of 2020. This was true for all three major sectors: office, industrial, and retail. 2020 ended with a strong fourth quarter, indicating early signs of recovery, but fell again in the first three months of 2021. Office, which has traditionally been the most attractive sector for investors, saw GBP 2.12 billion (USD 2.53) in real estate investments, more than one billion less than industrial.
UK Office Real Estate Industry Overview
The United Kingdom Office Real Estate market is fragmented due to a low level of market share concentration. The industry is highly competitive. The United Kingdom's office real estate market is extremely attractive to investors, both at the domestic and international levels. Companies are leveraging strategic collaborative initiatives to increase their market share and profitability.
UK Office Real Estate Market Leaders
*Disclaimer: Major Players sorted in no particular order
UK Office Real Estate Market News
April 2022: Taking the opportunity to rethink its workplace approach throughout the pandemic, Avison Young used its London Gresham Street office to create two pilot spaces-one transformed and one legacy floor that remained unaltered-to compare the effect of different layouts and amenities. While employees in Avison Young's London office were already working in an agile way before the disruption of COVID-19, the newly configured floor underwent a transformation to an activity-based model.
January 2022: IWG, the world's leading provider of workspace, is introducing electric vehicle (EV) chargers across a number of its locations in the United Kingdom to help the nation's hybrid workforce operate more sustainably. IWG is installing EV charging points at a number of its office locations in the United Kingdom to support members' sustainable choices.
UK Office Real Estate Market Report - Table of Contents
1.1 Study Assumptions
1.2 Scope of the Report
2. RESEARCH METHODOLOGY
2.1 Analysis Methodology
2.2 Research Phases
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS AND DYNAMICS
4.1 Market Overview
4.2 Market Dynamics
4.2.1 Market Drivers
4.2.2 Market Restraints
4.2.3 Market Opportunities
4.3 Technological Innovations in the Office Real Estate Market
4.4 Government Regulations and Initiatives in the Industry
4.5 Insights into Rental Yields in the Office Real Estate Segment
4.6 Insights into the Key Office Real Estate Industry Metrics (Supply, Rentals, Prices, Occupancy, Vacancy)
4.7 Insights into Office Real Estate Construction Costs
4.8 Insights into Office Real Estate Investment in the United Kingdom
4.9 Porter's Five Forces Analysis
4.9.1 Bargaining Power of Suppliers
4.9.2 Bargaining Power of Consumers/Buyers
4.9.3 Threat of New Entrants
4.9.4 Threat of Substitute Products
4.9.5 Intensity of Competitive Rivalry
4.10 Impact of COVID-19 on the Market
5. MARKET SEGMENTATION
5.1 By Key Cities
5.1.4 Other Cities
6. COMPETITIVE LANDSCAPE
6.1 Overview (Market Concentration, Major Players)
6.2 Company Profiles - Real Estate Players *
6.2.1 JLL United Kingdom
6.2.2 Knight Frank
6.2.4 Lambert Smith Hampton
6.2.5 Cushman & Wakefield
6.3 Company Profiles - Developers *
6.3.1 Kajima Estates
6.3.2 Hines United Kingdom
6.3.3 Seven Capital
6.3.4 LBS Properties
6.3.5 Salboy Ltd.
7. MARKET OPPORTUNITIES AND FUTURE TRENDS
UK Office Real Estate Market Research FAQs
What is the current United Kingdom Office Real Estate Market size?
The United Kingdom Office Real Estate Market is projected to register a CAGR of greater than 6% during the forecast period (2023-2028).
Who are the key players in United Kingdom Office Real Estate Market?
Kajima Estates, Hines, LBS Properties, JLL UK and Knight Frank are the major companies operating in the United Kingdom Office Real Estate Market.
United Kingdom Office Real Estate Industry Report
Statistics for the 2023 United Kingdom Office Real Estate market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. United Kingdom Office Real Estate analysis includes a market forecast outlook to 2028 and historical overview. Get a sample of this industry analysis as a free report PDF download.