UK cities outside of London are delivering high volumes of office space as developers respond to the increasing demand from businesses for regional city office locations.
In 2019, nearly two million sq ft of office space was delivered to market and a further 4.3 million sq ft is currently under construction in Belfast, Birmingham, Leeds and Manchester.
These four cities are part of Deloitte Real Estate’s latest crane survey series which monitors construction activity across a range of sectors including offices, residential, hotels, retail, education and student housing.
Simon Bedford, partner and regional head at Deloitte Real Estate, commented on the regional crane surveys’ findings: “Regional cities continue to show huge resilience in the face of recent economic uncertainties in delivering record volumes of city centre living, offices and education. Investment and job creation is trending in all the crane surveys as developers respond with high levels of new office space – 5.6 million over the last three years, most of which was already pre-let or quick to let on completion.”
Pauline Biddle, managing partner regional markets at Deloitte, added: “The crane survey findings are further evidence of regional growth which supports the Government’s priority in spurring economic success in the regions. London is a global hub of crucial importance, however our regional engines are essential for national growth so that all parts of the country, and the people who live there, are able to achieve their full potential.
“The report also reflects the shift as businesses expand, relocate and choose to head-quarter in regional cities with local authorities working hard to deliver plans and position themselves as alternative attractive locations for global and domestic businesses.”
Simon Bedford explained it has been a record year for residential with three English cities delivering more homes than at any time since 2007 and our development pipeline suggests this trend will continue.
“However, fewer homes have been delivered than we’ve previously anticipated driven by a lack of skilled labour, increasing costs, scarcity of development land, and developers being at capacity,” he added. “This could present real challenges for future delivery.
“The crane surveys are showing changing patterns in the retail and leisure sectors. Developers have moved away from big schemes favouring smaller projects - primarily linked to residential blocks – such as units for food, beverage and convenience retail. This trend should help regional cities’ place-making agendas, delivering new and exciting neighbourhoods and more independent offers as these schemes appeal to smaller enterprises.”
Education is still a big driver of construction activity in each of the cities with nearly three million sq ft of learning facilities under construction. The four cities are also set to deliver 7,495 student bed spaces in the city centres and more is in the development pipeline as the universities continue to invest in both teaching accommodation and student housing.
Looking ahead, Simon Bedford concluded: “Developer sentiment remains high but we’re seeing real challenges arising in the need for infrastructure investment to keep up with the pace of real estate.
“Cities are recognising the climate change emergency and we expect to see policy shifts as cities respond, such as reducing vehicle access to city centres. This will have a near term impact on the development and construction sector and is an important theme we will be closely monitoring.”
