Ask the panel: Prime office stock – how can the North West meet demand from businesses?
Annual and quarterly reports on the region’s office market have once again brought concerns of demand for prime stock outstripping supply. With this in mind, we ask the experts:
Q: Amid ongoing concerns over a shortage of prime office stock, how can the North West ensure it remains able to meet the demand from businesses?
director of national offices at Colliers International in Manchester
With the stock of ready-to-walk-into Grade A offices in Manchester city centre falling to less than 75,000 sq ft, occupiers are allowing more project lead-in time by increasingly turning to the in-build supply chain.
There are currently four Grade A projects underway, delivering between them almost 500,000 sq ft by the end of 2019, with intense interest from potential occupiers already reported.
Manchester city centre has always thrived on having a wide choice of new offices available and, with another 1.26m sq ft of Grade A office space consented and ready to start for delivery from 2020, talk of a supply crisis looks overdone with the city facing a temporary ‘blip’ that’s about to correct itself.
partner, Hitchcock Wright & Partners
Prime office stock is essential to attract and, more importantly, retain big corporate players to the North West and Liverpool in particular.
Reduced stock in the region, particularly Liverpool’s central business district, has reached alarmingly low levels with effectively 12 months’ worth of take-up remaining.
Rental prices in Liverpool need to rise to aid expansion of stock and to encourage developers and existing landlords to build or refurbish new high quality accommodation.
There’s undoubtedly an onus of responsibility on landlords, tenants and property professionals to re-educate their clients. On the landlords’ part to encourage the provision of the highest quality specification, and on the tenants’ part in understanding and appreciating that this comes at a cost and therefore realising they must be prepared to pay more and accept less in the way of tenant inducements if they’re to enhance their environment.
In turn, this should help re-balance the market, reducing office stock lost to uses such as residential and hotels and finding opportunities to refurbish and upgrade older stock.
head of investment, CEG
Landlords need to remain confident about investing in refurbishment, as well as speculative development; deliver the right space and demand is there.
Occupiers are seeking offices to help them attract and retain the best talent, as well as providing an environment designed to increase productivity and help their business flourish.
Inspiring space, diverse local amenities, healthy lifestyles, strong and resilient connectivity and efficient building running costs are high on the list of today’s occupier needs.
Space which encourages collaboration has moved far beyond the water cooler; quiet rooms, Skype pods, break-out areas and places to meet, chat, work and get good food and coffee will improve business efficiency.
Working with existing and potential tenants to better understand their business requirements and then tailoring the refurbishment and leasing structure accordingly will ensure your space better meets demand.
managing director of CBRE’s North West business
It’s well publicised that the North West has experienced exceptionally high demand for office space over recent years and the average annual take-up for Manchester city centre space now sits at over 1 million sq ft per annum. Supply is just about keeping up with demand but the North West must take note that the supply of office space is critical in ensuring the continued growth and prosperity of the region.
SMEs, start-ups and tech firms need space to grow and therefore we must not only build more Grade A stock but protect existing office buildings in key employment locations. This means protecting buildings from new uses such as hotel and residential conversions.
Tax breaks for developers who refurbish existing office stock, and also a robust planning regime protecting office use within city centres and areas of high employment, would help the supply situation. Creating flexible and collaborative working environments with the best fibre connectivity and infrastructure will be critical if the North West is to attract and retain businesses.
senior development executive, Ask Real Estate
The development of high quality real estate is essential for the North West in order to attract further investment and growth. As the capital of the region Manchester has an important role to play in delivering this required development, particularly in the office sector, to offer both inward investment and expansion opportunities.
Manchester still remains very attractive for businesses due to its relatively low cost point and highly skilled workforce but without a good supply of new office stock there’s danger businesses may look to other large conurbations to satisfy their office requirements.
As developers in a market where funding for speculative office development still remains challenging, we’re looking to unlock key office developments by partnering with local authorities. An example is 100 Embankment where, with the support of Salford City Council, we’re due to commence shortly with Phase 2 which will deliver a further 165,000 sq ft to the market in Q1 2020. This will help provide much needed office pipeline in 2020.