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Rise in office refurbishment identified by survey

13 July 2017

Rising construction costs have been attributed to the reason for an increase in the refurbishment of offices by developers, according to research conducted by Savills.

This is increasingly including refitting, with creative internal fit-outs used to retain staff and attract new talent to businesses, the World Research study revealed.

Developers and clients are now demanding more attractive reception areas, along with the installation of bars and gyms to meet workers' expectations.

Over the next three years, 38% of the UK's total speculative office space will be provided by refurbishment exercises, said the survey.

Average office rents will rise as a result, said Savills, and states that increasingly more landlords will take the opportunity to refurbish secondary stock to secure increased rent levels.

The trend for refurbishment has increased over the last five years, with 25% of Manchester's Grade A stock accounted for by refurbishments, for example, which is expected to increase further over the next 12 months.

Areas that were previously considered fringe locations are now becoming more attractive following refurbishment projects, with the Birmingham 'inner ring' provided as an example.

Refurbished rental growth in Bristol has been recorded as exceeding new built rental growth, said the study.

The trend is also being fueled by Grade A office availability in UK regions being at their lowest level on record.

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