Office supply in the UK's key regional markets has fallen 35 per cent since 2009, according to new analysis from real estate firm Savills.

The business said, combined with stable rents and low office vacancy rates, the data supports the case for investing in top regional office assets.

Although the fall in office space has been primarily caused by limited development activity, conversion of poor quality offices to alternative uses under permitted development rights is also said to have played a key role.

Using data from the Ministry of Housing, Communities and Local Government and assuming an average dwelling size equates to 807 sq ft, Savills has calculated the amount of office floorspace that has been converted to residential uses since 2015 is an estimated 14.4 million sq. ft. in London, with a further 37.9 million sq ft of offices converted to residential across the rest of England.

Findings show that office to residential conversions have been the main source of new dwellings under permitted development rights, accounting for 89 per cent of total conversions in this time period.

Concurrently, while the regional office vacancy rate has increased very slightly from 10 per cent in 2019 to its current 11 per cent due to the Covid-19 pandemic, it remains extremely low in a historic context as there is an undersupply of office space within most regional markets.

Richard Merryweather, joint head of UK investment at Savills, said: "The low vacancy levels and very limited new development in core markets continues to attract a broad range of domestic and overseas investors. Prime yields in the key regional cities have held firm and value add investors are looking to take advantage of the very limited development pipeline."

Clare Bailey, director in Savills commercial research team, added: "Demand for UK offices, both from occupiers and investors remains strong, despite the events of the last year. They are, however, having to share some of the limelight with industrial assets, which given record levels of take-up in the face of the e-commerce boom, have joined them at the top of buyers' shopping lists."