Achievable rents are stabilising in around half of the 165 UK town and city markets monitored in Jones Lang LaSalle's latest office trends report.
JLL's UK Office Rents: Benchmarking 165 Centres showed rental levels in the major regional centres of Manchester, Liverpool and Leeds have remained unchanged since March 2009. The most generous rent-free periods can be found in the North West and North East, where the average incentives are 26 and 30 months respectively.
Manchester's was in the top ten highest achievable rents at around £28/sq ft, although this falls towards £20/sq ft in average net effective rent after taking into account the free period.
The report also shows that a handful of markets including Derby and Newcastle-under-Lyme are now showing signs of some rental growth, however this is due largely to the addition of new, quality office supply rather than a recovery in market fundamentals.
Since March 2009, incentives have also begun to stabilise however JLL's research showed that substantial cost savings can still be obtained by occupiers in many regional centres.
Year-on-year cost savings are currently the most generous in Bradford, Gateshead, Canterbury and Leatherhead.
James Finnis, head of Jones Lang LaSalle's national office agency team, England, said: "In around 60% of UK markets monitored rent-free periods stabilised over the last 12 months and a further 15% of markets witnessed a reduction in the rent-free periods being offered by landlords. Whilst incentives are hardening, landlords continue to offer competitive terms in order to secure a tenant. Broadly speaking market conditions for Grade A space currently remain in favour of the occupier, but there is a closing window of opportunity."
Angus Currie, head of tenant representation in Jones Lang LaSalle's national office agency, added: "Supply of prime product is tightening in certain core markets with rents and incentives firming up as a result. With little development likely to come through in the short to medium term, we anticipate that this trend will continue as the availability of better quality and located space decreases. Our advice to occupiers in many markets is to act sooner rather than later to secure space on preferential terms and to deliver tangible benefits to the bottom line."