February 11, 2016

Manchester set to run out of Grade A office space this year, claims report ⁰

by Mark Eltringham • Cities, News, Property

Manchester could completely run out of ready to occupy, Grade A office space this year, according to a new report from Colliers International. The snapshot of the commercial property market in the city claims that take-up of space in Manchester during 2015 was over a third (37.5 percent) above a ten year average and the rate of occupation by both UK and overseas firms was double that of the previous three years. As a consequence, the local property market is currently unable to keep pace with demand and the availability of Grade A space declined by 61 percent during the year to reach its lowest level since 2006. There is now just 216,000sq ft of Grade A stock available to let in Central Manchester, with major new developments in the key Spinningfields district (above) and elsewhere not expected to complete until later this year and into 2018. Even some of these spaces are already let, according to the study.

February 11, 2016

Majority of UK’s small businesses would opt for coworking spaces ⁰

by Sara Bean • Flexible working, News, Property, Workplace design

Almost three quarters (72 percent) of small businesses in the UK believe coworking spaces are the ideal environment to base a start-up. Although the research was carried out by Regus, which happens to provide just that sort of workspace, the research did detect some strong preferences from small businesses that suggests sharing office space is the best solution for fledgling firms to thrive. When asked about the benefits of coworking compared to other workspace options, more than eight in ten respondents (83%) from the research, which canvassed the opinions of over 2,600 UK-based small companies, claimed it was a much more cost-effective alternative to a fixed office. The opportunity to meet other entrepreneurs (70 percent) was also identified as a major plus point, with 63 percent believing that shared space provides more inspiration than a traditional office setting and 61 percent saying that this kind of workplace offered a more creative environment that regular offices.

February 10, 2016

Moderate growth for global commercial real estate predicted in 2016 ⁰

by Sara Bean • Facilities management, News, Property

US and European office markets will tighten further in 2016 as demand for space outpaces a limited number of new developments, according to CBRE Group’s 2016 Global Real Estate Market Outlook. However, the extent of tightening in individual cities will depend strongly on local job growth in major office-using industries. Global prime rents across the three major property types—office, industrial and retail—are expected to grow 2.2 percent on an annual basis, according to estimates from CBRE’s Global Rent Index. The Americas, thanks to the strength of the US property sector, is expected to see commercial real estate rents rise 3.4 percent in 2016, as consumption growth and rising employment, combined with comparatively limited new supply levels, simulates demand. Rents in EMEA are forecast to rise by 3.2 percent thanks to a combination of increased consumer spending, pent-up demand for commercial space and anticipated further monetary easing by the European Central Bank.

February 9, 2016

Better workplace design and management could save the NHS £1 billion ⁰

by Mark Eltringham • Facilities management, News, Property, Public Sector, Workplace design

The National Health Service could make around £1bn in savings if it made better use of its estate, including more efficient workplace design, according to Lord Carter’s wide-ranging 18-month review into the operations and productivity of the NHS. The wide ranging review claimed that a total of £5bn could be saved by adopting a range of best practice standards. Carter examined 32 hospitals as well as looking at systems in the US, Germany, Australia, Italy and France for the report. Among the differences highlighted were variations in the use of floorspace, with one trust using 12 percent for non-clinical purposes and another using 69 percent. Overall, the review suggests that the NHS could save £1bn by 2020 via from the better management of estates, such as lighting, heating and the utilisation of floor space. The challenges of running the NHS estate efficiently have been something of an issue for some time, as we have reported.

February 8, 2016

High urban rents and falling rural land prices drive flight of startups to countryside ⁰

by Mark Eltringham • Flexible working, News, Property, Technology, Wellbeing

We’ve reported before on the flight of tech firms and other startups from the UK’s cities to the countryside. Now it appears that 2016 will see an acceleration in the exodus, as a consequence of the perfect storm of expensive rents in the cities, falling rural land prices and a growing number of people using technology and improving digital infrastructure to live somewhere they feel they have a more balanced life. That is the striking conclusion of a new survey from the Royal Institution of Chartered Surveyors (RICS) and Royal Agricultural University (RAU) indicates. Over the second half of 2015, non-farmers, such as those starting-up cottage industries, accounted for around 25 per cent of rural land sales. This figure was up from just 18 per cent in the first half of 2015, according to the RICS/RAU Rural Land Market Survey H2 2015 and the trend was strongest in South East England where non-farmers accounted for 32 per cent of all sales.

February 6, 2016

Robot’s rise + Shrinking public sector estate + Office of the future (not) ⁰

by Sara Bean • Facilities management, Flexible working, Property, Public Sector, Wellbeing, Workplace, Workplace design

In this week’s Insight newsletter; Gary Chandler envisages how automation will transform society and workplaces; Paul Goodchild explains why office life still attracts people; Mark Eltringham bemoans the narrow focus shown in predictions of the future office and Sara Bean says the HR discipline needs to evolve to support the changing workplace. A new report reveals 88 percent of British workers are regularly stressed at work; employees are increasingly keen to find jobs that offer them flexible working; and men are penalised for opting for a better work/life balance. Government plans to cut the size of its estate by 75 percent by 2023 and an expanding TMT sector increases demand in central London. Download the latest issue of Work&Place and access an Insight Briefing produced in partnership with Connection, which looks at agile working in the public sector. Visit our new events page, follow us on Twitter and join our LinkedIn Group to discuss these and other stories.

February 5, 2016

What the commercial property market tells us about trends in office design ⁰

by Paul Goodchild • Comment, Property, Workplace design

It’s become commonplace in recent years for certain people to foresee the death of the office. The problem with this argument is that, in spite of its drawbacks, office life maintains an attraction for both employers and employees and there will always be an upper limit on how long people want to spend away from other people. Things are changing but the death of the office is a myth. As we’ve known for at least a quarter of a century, there is no absolute need for us to go to work at all. Theoretically we could just do away with offices completely if we wanted to. But as we have seen, the fact we have evolved technology to the point where we could forget about bricks and mortar, doesn’t necessarily mean we will. Not only are there practical reasons for offices to continue to exist, there are emotive ones too. If you want evidence of this, look no further than the records currently being set by the UK’s commercial property markets.

February 4, 2016

London’s ability to foster startups lagging behind other key UK cities ⁰

by Neil Franklin • Cities, News, Property

The UK’s largest regional cities have produced twice as many startups as London over the last two years, according to research based on Companies House Data. The report, commissioned by office broker Instant Offices, compares the number of startups in each city to create a list of the country’s most entrepreneurial cities. The authors claim that the UK is now Europe’s most entrepreneurial country with over 2,644,100 businesses started within the last two years alone, according to data gathered from Companies House. The report cites the example of Liverpool with an estimated population of 440,000 and 57,323 new companies starting over the past 2 years. This results in an entrepreneurial population percentage of 16 percent. Birmingham’s entrepreneurial population percentage was 14.5 percent followed closely by Manchester at 14 percent. These numbers are significantly higher than the UK average of 2 percent and London’s 7.5 percent.

February 4, 2016

Maturing TMT sector fuels demand for office space in Central London ⁰

by Sara Bean • Facilities management, News, Property, Technology

The Technology, Media and Telecoms (TMT) sector was the largest source of demand for office space in Central London in 2015, for the fifth consecutive year finds the latest Knight Frank London Report, Canary Wharf is set to have the strongest Central London office rental growth in 2016 with an increase of 12.8 percent. This is followed by Shoreditch at 10 percent and Midtown at 9.6 percent. Affordability is the main driver, along with the development of Crossrail, integrating Canary Wharf with the rest of Central London, and a general shortage of available offices across London pushing tenants seeking high quality affordable offices eastwards. Expansion by TMT firms is contributing to the shift, as they are increasingly seeking larger offices. Shoreditch’s increase in office rents will principally be driven by Tech sector expansion as the more mature, established heavy weight tech firms have firmly established a London rival for California’s ‘Silicon Valley’ in the area.

February 3, 2016

Government plans to cut size of estate by 75 percent by 2023 ⁰

by Mark Eltringham • Facilities management, News, Property, Public Sector, Workplace design

The UK Government has today published the latest edition of its annual State of the Estate report, which gives an update on plans to consolidate, divest and modernise the central government property portfolio. Minister for the Cabinet Office Matt Hancock claims that the current administration has reduced the size of the estate by 2.4 million sq. m. since 2010. (As is the way of these things, the minister claims this is equivalent to 336football pitches, 43 Shards or more than the entire principality of Monaco. Presumably individual departments measured their own successes in blue whales and double decker buses.) He claims that this means that the total central government estate has fallen below 5,000 holdings for the first time and could fit inside the area of West Finchley (which is a new measurement on us). The reduction has been achieved by selling property ranging from the historic Old War Office (top) to an old bakery and lighthouse.

February 2, 2016

Record investment in UK commercial property in 2015, but trouble ahead ⁰

by Mark Eltringham • News, Property

A near record £67.5 billion was invested in UK commercial property in 2015, making it the second strongest year on record and 46 per cent above the 10-year average, according to research from commercial property analysts CoStar Group. Momentum slowed sharply in the second half of the year, with investment down 19 per cent from the previous year. According to CoStar, this reflects the fact that investment activity has been especially strong over the previous 18 months and good opportunities are harder to find, but also that global economic and political uncertainty are impacting investment decisions. Nevertheless, 2015 was a strong year for the UK’s Big Six regional cities. Office investment increased 16 per cent to £3.2 billion, which is the highest level since the recession and more than double the eight-year average. Foreign investors seeking standing assets and development opportunities underpinned much of this investment.

February 1, 2016

M25 office market returns to pre-recessionary levels as demand increases ⁰

by Sara Bean • Facilities management, News, Property

The ‘M25’ office market returned to pre-recessionary levels in 2015 as take-up reached 4.25 million sq ft, which is the highest recorded figure since 2007. Given the higher levels of demand in the regional commercial property market, take-up is predicted to reach 4.5 million sq ft for 2016. The research by Savills claims that the ‘Western Sector’ was the strongest performer in the market within the M25 during 2015, where 1.91 million sq ft was transacted, which accounted for 44 percent of total take-up. Improving economic conditions combined with a reduction in grade B and C office space, due to permitted development rights, meant that 62 percent of space transacted was for grade A space. Total supply currently stands at 18.34 million sq ft, which is a 7 percent decrease from 2014, not helped by the fact that approximately one million sq ft of office space has been converted to residential uses since 2014.