The latest UK Regional Cities Office Market Review by Knight Frank reported that there are four key market drivers in the regional office market and one of them is due to a change in attitude from Government.
The report states: ‘There is now the political will to empower the regional cities, something that arguably was missing in the past’, adding, ‘even before the Brexit vote, a core part of Government economic policy was to rebalance the national economy.
Infrastructure investment underpins current strategy alongside the devolution of power to city regions, a process that will bring newly elected mayors to some cities. Consolidation of the government office estate is also creating opportunities in the regional office markets. The strategy of creating collaborative hubs has led to large-scale requirements for new office space across many UK centres. At the time of writing, the Government Property Unit (GPU) is actively seeking 2m sq ft across seven of the ten major (regional) markets. This equates to roughly one third of the combined annual office take-up total.’
That is a big jump in demand for regional office space. Knight Frank says that the other three market drivers are changing occupier requirements (more on that later), a resilient UK economy, ‘which has surprised on the upside since the June 2016 referendum’, and continuing interest from overseas investors.
UK regional office investment was buoyed by overseas buyers in 2016, with international money accounting for 45% of all investment into offices across the 10 cities tracked by Knight Frank’s report, up from 35% in the previous year. However, this was more down to a fall in domestic investment volumes following Brexit than an increase in overseas buying.