Many businesses consider relocating their offices in January, some looking for bigger and better headquarters, while others are seeking to reduce their overhead costs. Savoy Stewart, experts in commercial property, therefore decided to analyse governmental statistics and identify Britain’s hottest office hotspots using office floor space data in and out of London.
Savoy Stewart looked at the data set on the business floorspace published by the Valuation Office Agency which, among other things, also contains data on office floorspace from 2000-01 to 2015-16.
Despite the Premium Cost, Inner London Remains the Most Desirable Office Address
Considering Central London’s importance as the epicentre for business and finance, it’s no surprise that, despite the premium cost, inner London remains the most desirable office address. With a total floorspace of 21,092,000 square metres, office space in inner London accounts for nearly one quarter (23.68%) of the total office floorspace in England and Wales (89,037,000 square metres), more than four times the total office floorspace in outer London (5,056,000 square metres) and more than the total office floorspace of the top 10 office hotspots outside London combined.
However, it was very surprising to see that – despite the reports of a growing number of businesses relocating their offices to the less expensive outer London boroughs and even outside London – office space within inner London has been growing steadily over the last decade.
From 2014-15 to 2015-16 alone, office floorspace in inner London grew by 207,000 square metres, which is an increase by nearly 1%. From 2006-07 to 2015-16, there has been an increase of office floorspace by 1,801,000 square metres or 8.53%. In contrast, office floorspace in outer London has been steadily decreasing, falling from 5,150,000 square metres in 2014-15 to 5,056,000 square metres in 2015-16 which is a decrease of as much as 1.82%. From 2006-07 when the total office space in outer London accounted for 5,497,000 square metres, there has been a decrease of 8.02%.
Photo credit: Alexander Steam/Shutterstock
Less Surprises in Analysis of Office Hotspots Within London
Analysis of the official statistics for office hotspots within London didn’t reveal any major surprises. Just like in 2006-07 – and earlier, Westminster remains the prime office hotspot in inner London in 2015-16. It accounts for a total of 5,376,000 square metres of office floorspace, followed closely by the City of London (5,226,000 square metres), Tower Hamlets (2,467,000 square metres) and Camden (2,268,000 square metres). Of all the mentioned office hotspots in inner London, however, Westminster had the slowest growth of office floorspace from 2006-07: 5.19%. At a growth of 14.49%, the City of London grew at the fastest rate, followed by Tower Hamlets at 11.47% and Camden at 9.39%.
With an exception of a few boroughs such as Waltham Forest, Redbridge, and Barking and Dagenham which experienced a slight growth since 2006-07, office floorspace in the majority of other outer London boroughs has shrunk. The trend was particularly dramatic in Croydon where office floorspace decreased as much as 14.05% in the past decade. Despite that, it remains one of the top three office hotspots in outer London, falling behind Hillingdon (620,000 square metres) and Hounslow (647,000 square metres).
Trend in Office Hotspots Outside London Mostly Negative
Researchers at Savoy Stewart also analysed changes in office hotspots outside London. Their findings reveal a growth of office floorspace in 8 out of 10 most popular office destinations since 2006-07. However, Savoy Stewart also noticed that compared to 2014-15, there is a negative trend in 7 out of 10 office hotspots, including the most desirable office locations – Manchester (-0.75%), Birmingham (-0.16%) and Liverpool (-3.70%).
Office floorspace shrunk the most in Liverpool which lost 41,000 square metres or 3.70% of office floorspace from 2014-15. A substantial decrease of office floorspace was also observed in Sheffield and Reading, which lost 25,000 square metres (2.67%) and 40,000 square metres (2.50%), respectively. Elsewhere, the negative trend was less dramatic– below 1%.
Growth of office floorspace was observed in just 3 office hotspots outside London: Milton Keynes, Cardiff and Salford. From 2014-15 to 2015-16, office floorspace in Milton Keynes increased for as much as 15,000 square metres or 2.67%, which makes it one of the fastest growing office hotspots outside London. The Welsh capital of Cardiff was at a growth of 2.12% second only to Milton Keynes although it got more square metres of new office space – 21,000 square metres. At a growth of 1.05% which equals 6,000 square metres, Salford ended up the third fastest growing office hotspot outside London.
Darren Best from Savoy Stewart commented:
“The statistics may not show the whole picture but they reveal a lot about the commercial property market in England and Wales, and in particular, the office sector. We have witnessed major changes in the last decade including the rise of alternatives to inner London which has become too expensive for a growing number of businesses.
However, results from the analysis of official statistics also reveal that the market in office hotspots outside London is quite volatile and unpredictable. Furthermore, the latest available data shows that – except for three office hotspots – there has been a negative trend outside the UK capital. This suggests that the office hotspots outside London will need to offer more than just competitive prices per square metre if they want to remain attractive to businesses and perhaps someday become a more serious rival to London.”