October 21, 2020
As the tech sector and associated businesses rise to the pressures and opportunity presented by the reality of COVID-19, Sue Foxley, Research director at Property Consultants Bidwells delves into the impact of the virtual change within the Milton Keynes office market.
The floorspace taken by the IT sector is up 150 percent compared with the same period last year, while high tech manufacturing businesses have already taken twice as much office floorspace in Milton Keynes than recorded in 2019 as a whole.
The expansion of such knowledge industry sectors over the last six months has contrasted with the more cautious activity of those in the business and professional services sector. As a result, knowledge focused sectors comprised 60 percent of take up in the Milton Keynes cluster, up from 50 percent in 2019.
It is not only the shift in the structure of activity that is notable. Despite the challenging circumstances, the Milton Keynes cluster has seen take-up reach trend levels in H1, with 149,900 sq ft of space let and 70,000 sq ft under offer at the end of June.
Given the return in demand we have seen in the first months of Q3, we expect Milton Keynes’ take-up for 2020 to exceed that seen in 2019.
This performance in part reflects the impact of the COVID-19 crisis and the business activity in the sector during this period, including some signs of interest from out-movers from the capital.
However, it also reflects the longer-term growth of the city’s IT cluster at the expense of professional and business services. Over the last 18 months, IT has been a key driver of activity, comprising 42 percent of total take-up. This is illustrated by the final letting of 56,000 sq ft at 100 Avebury Boulevard to Xero Accounting, the leading cloud accountancy software group.
Graduates in AI, robotics and the like will present a strong draw for business growth going forward.
As a global Smart City, Milton Keynes has been at the forefront of the use of digital data to enhance sustainability, economic growth and openness. Linked to this, the city is frequently the testbed for the tech sector. Two years ago, the city saw the first trials of delivery robots, operated by Estonian company Starship, which have now been adopted by the Co-op and it has been at the centre of the electric vehicle revolution.
Such activity is on top of the breadth and depth of the wider M1 south technology cluster. This ranges from high-tech engineering at Silverstone Technology Park to the COVID-19 testing activity at one of the UK’s mega “Lighthouse Labs” located just outside the city.
Graduates in AI, robotics and the like will present a strong draw for business growth going forward. But, this inevitably will present challenges for the market. Over the last four years the supply of office floorspace has reduced by around a third in Milton Keynes.
More significantly, Grade A stock now stands at its lowest level in 15 years. The tech sector tends to focus on prime space and evidence from these first months in our new COVID-19 world further reinforce this position. 47 percent of H1 take up in Milton Keynes was Grade A offices up from 37 percent in 2019.
It is likely that time spent in the office will focus increasingly on high value collaborative activities – the quality of the space may therefore become more, rather than less, important. As the next evolution of Milton Keynes emerges, with tech at its core, the provision of quality office space will need to be addressed.
Click here to download the latest M1 South Offices market research paper.
Image by Gerd Altmann