Last year’s renaissance in office occupation is set to continue throughout 2018, according to a report from leading commercial property consultancy Knight Frank.
Writing in Knight Frank’s UK Regional Cities Office Market review, head of commercial research Dr Lee Elliott said occupier activity in the regional markets in 2017 had surprised on the upside, despite a backdrop of persistent geopolitical uncertainty and slow economic growth rates.
Combined take up in 10 key cities – including Birmingham – was some 1.3 million sq ft above the 10-year average.
“The cities were beneficiaries of a perfect storm,” said Dr Elliott. “Businesses, under huge pressure from digital disruption, brought change to business models which fuelled market demand. Furthermore, the economic backdrop forced many to actively consider and commit to locations that presented a property and operational cost advantage or a cost profile more appropriate to the type of business function being fulfilled.”
Regulatory and political pressures, rethinking of the Government’s property estate and the ringfencing of UK retail banking operations also fuelled significant regional requirements.
Dr Elliott said: “For 2018, business confidence, investment and hiring intentions are all positive, relative to their position a year ago, although the twists and turns of Brexit may well bring volatility to these indicators.
Jamie Phillips, head of Knight Frank’s office agency team in Birmingham, said: “Last year proved to be an exceptional year for occupier activity in Birmingham, as both resident firms and new entrants vied for city centre space. The 238,900 sq ft, 25 year pre-let of at 3 Arena Central taken by the Government Property Unit (GPU) underpinned the take up of more than 1m sq ft for the year.”
Dr Elliott commented: “In our view, there will be four key characteristics of occupier demand in the regional markets during 2018 – increased occupier mobility, cost sensitivity – but not at the expense of workplace quality – further disruption fuelling demand, and an increased demand for service.
“We believe 2018 will be the year in which the co-working revolution hits the UK regions.”
Jamie Phillips added: “Birmingham was one of the earliest regional cities to recognise the need for coworking premises, where budding entrepreneurs and creative businesses can take advantage of modern mobile technology and share working and social facilities.
“Last year serviced office provider Regus committed to almost 100,000 sq ft of space in the city and we believe the Birmingham coworking trend will continue through 2018, and beyond.”
