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July 18, 2012

Demand in Edinburgh accelerates in previous quarter

Filed under: News — Tags: , , , — Office Space @ 6:00 am

While news that Edinburgh’s office space market experienced accelerated demand last quarter would normally be greeted with joy, concerns have begun to arise that the current supply in the northern capital will soon be exhausted.

According to research conducted by commercial premises experts, Jones Lang LaSalle, the more than 244,000 sq ft taken up in Edinburgh during 2012’s second quarter is the fastest growth the capital has experienced since 2007. Not only was this last quarter’s take up was approximately 20 per cent more than Q1 2012’s figures, Jones Lang LaSalle added that 2012’s second quarter left last year’s 150,000 square foot take up positively in the dust.

A series of large scale office space rental deals in Edinburgh city centre drove take up figures, with the 80,000 square foot letting of Exchange Place to Blackrock and Quartermile One welcoming both Investec and Skyscanner as well. However, the result of such heightened demand could lead to a complete exhaustion of all of Edinburgh’s Grade A offices in 18 short months, as the number of construction projects currently in the pipeline cannot possible keep pace unless demand drops off.

The city has approximately 400,000 square feet of new office space available at the moment, according to Jones Lang LaSalle’s calculations. However, 25 per cent of that has already been spoken for or is currently being negotiated over.

Ben Reed, JLL’s director of office agency for Edinburgh, remarked that the commercial office space experts have been sounding the alarm for quite some time in regards to the impending shortage.

July 13, 2012

Surrey offices going vacant – local business leaders worry

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With large swathes of office space in Surrey going vacant, local business leaders have voiced their concern in an effort to find a way to revitalise the economy within the region.

The manager of a local shopping centre, Andy Nash, was interviewed by the local Mirror, stating that the economic climate has been feeding a ‘vicious circle,’ as cutbacks to local businesses mean more vacant commercial office space, which then leads to less cash coming back into the community through spending. The more this cycle continues, the less attractive it becomes to live in such an area, and Mr Nash fears that unless something is done soon to stem the tide, the region may begin to slide into obscurity.

Local commercial premises experts agree with the shopping centre manager’s assessment, remarking that when office space rental figures plummet, the economic impact to Surrey could be quite serious. The lack of modern offices in town centres was cited as a major reason for businesses to relocate, as the needs of the modern company have evolved away from the more pastoral second-storey office above the corner shop and towards air conditioned, open plan team offices with lift access for disable clients and updated amenities.

Landlords have been trying to make these older-style offices as attractive as possible by slashing rental prices, but this has had little effect on the mass exodus to more modern offices in larger city centres. Instead, experts say that the next step may very well be to refurbish these offices for residential use in an attempt to attract younger Brits to live in town centre flats instead.

July 11, 2012

Offices are more than just a place to work, experts say

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Commercial premises play a role in establishing the culture of your business as well as simply providing a place to get work done, experts say.

Experts in the office space sector were recently asked by the Manchester Evening News to chime in on their opinions about the kinds of challenges businesses face when relocating from one office to another under the current market conditions, with the consensus being that offices aren’t just places to go in order to get work done. Instead, a company’s office environment is a place that acts as an integral piece of the support structure of the business.

There’s simply more than just keeping the rain out when it comes to office space, experts commented. You need to provide an environment to your staff in order to allow them to function properly and efficiently in their roles, and the right office environment goes a long way towards achieving that goal; businesses are now keeping these needs in mind as much as they are keeping a close eye on the costs of an office space rental.

Office relocation is now as much about finding commercial office space that will provide a cost-effective place to conduct business as it is about finding a place that will support the cultural identity of a given company, experts added. The least expensive option isn’t always the best one, even though economic pressures place an inordinate amount of weight on that particular factor, but business owners and office managers are rapidly learning that an office accommodation that ticks all the boxes – and not just one – lead to business growth.

July 4, 2012

Edinburgh Grade A office supply dangerously low?

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One new report from commercial premises specialists GVA has revealed that it could be as little as 18 months before the Grade A office accommodation in Edinburgh is exhausted.

Demand in the Scottish capital’s city centre seems to be following in the footsteps of London’s market, as it will soon outstrip the remaining supply of office space, GVA said, adding that a large part of the problem is both a lack of confidence in the private sector and severely restricted finance options for new construction in Edinburgh. There is an ‘urgent’ need for grade A office development in the city, argued the commercial office space specialists in their report, especially in light of the highly energetic nature of the grade A office market over the last year in Edinburgh.

Stock is continuing to diminish – and rapidly – GVA warned, and with no evidence existing that demand will recede any time soon, the property consultants fear that the well will soon run dry in regards for appropriate grade A space.

AGV Scotland’s national markets director, Toby Whithall, commented on the new report, remarking that many make the common mistake in thinking that the banking crisis and resultant economic downturn led to financial service companies abandoning the city in droves as their costs ballooned, the truth of the matter is that the lion’s share of the banking sector doing business in Edinburgh remained exactly where they were, which means that there is very little high-quality space in the city that has remained unoccupied. Moreover, new construction remains very scarce, with only two sites in the pipeline to be completed in the immediate future, which could lead to upward pressure being exerted on office space rental prices in Edinburgh as supply dwindles while demand continues to rise.

June 27, 2012

Have a vacant office? Convert it to a gym, expert says

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If you’ve got commercial office space that’s sitting vacant and not earning you any money due to the poor economic conditions in the commercial premises market, one expert says you should consider converting the space into a gym instead.

Iain Mercer, office development tycoon and son of the late Wallace Mercer, chairman of the Hearts football club, says that unused office space in three of his Lothian-based office blocks have been converted into fitness centres. In fact, Mr Mercer has successfully transformed his office block in Dalkeith back to fully let after Pulse Pilates & Fitness Studio has replaced Welcome Finance, a former tenant that recently relocated, and two other lettings preceded this one, with the contracts seeing Mr Mercer’s Musselburgh-based Harbour Point offices and his Edinburgh-based WH1 development welcoming ‘mini-gyms’ operated by Curves.

The entrepreneur was cleared to bring in Pulse after applying for a change of use from Midlothian Council for the Soutra Point development, an approval granted to him partly because the fitness studio is the first of its kind within in the area. Mr Mercer said he would much rather see the space producing income and occupied than seeing it simply lie vacant and contributing nothing to his portfolio; he additionally said that the situation also benefits the council, as Pulse will be paying business rates to the local authority.

When asked about whether it was a desperate measure to allow fitness operators take up vacant office space, the young entrepreneur said that the economic situation in the UK is such that landlords need to read the writing on the wall. However, the lease agreement between Pulse and the office block is quite acceptable, Mr Mercer insisted.

June 1, 2012

Streets Heaver doubles up on commerical premises in Lincoln

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Streets Heaver, an clinical and administrative software supplier for NHS practices and independent hospitals, recently announced that it will be doubling up on its Lincoln commercial premises.

The software supplier is relocating to large, three-acre landscaped office space complex Streets at The Point off Whisby Road, thanks to the work of Hodgson Elkingon LLP, chartered surveyors.  Based in Lincoln for two and a half decades, Streets Heaver has invested in expanding its commercial office space to about twice the amount it currently has at its Doddington Road headquarters.

The larger office building will pave the way for the planned growth of the firm’s sales and marketing, support, testing, and software development teams.  Currently home to 26 staff members, Streets Heaver is planning a recruitment drive in the wake of winning several new key contracts and is scheduled to relocate to The Point this coming July.

The software development company’s managing director, Paul Heaver, remarked that the new office move is representative of a serious investment on the part of Streets Heaver.  The firm is committed to its expansion plans, and is keen to both maintain its high standards while growing its business to new heights, Mr Heaver added.

Hodgson Elkington partner, Dan Race, also commented on the new office accommodation deal, remarking that it was gratifying to see yet another Lincoln-based business relocate to such a successful and established development.

Streets Heaver joins several other occupiers already at The Point, including The Upper Witham Internal Drainage Board, BT Local Business, and accountancy firm Nicholson’s.

May 31, 2012

£19 million Wakefield One completed, says Morgan Sindall

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The Wakefield Metropolitan District Council’s new £19 million headqurters, Wakefield One, has reached completion, according to developers Morgan Sindall.

The new four-storey building, located directly next to County Hall, will provide office accommodation for the 1,200 council employees that will work there.  Based on a design by architectural firm Cartwright Pickard, the complex boasts 123,000 square feet of office space and features extensive glazing, a central atrium, and an open-plan design.

The newly completed office development is the next step of the Wakefield Merchant Gate Masterplan, a £140 million city regeneration project with an end goal of a new urban quarter within Wakefield that will stretch for 17 acres once completed.  The office project’s completion has placed Morgan Sindall in the enviable position as the front-runner for prestigious Building Excellence Awards, which are handed out by the West Yorkshire Local Authority Building Control.

The awards recognise developers and builders who meet high workmanship standards in residential construction and commercial office space projects.  There are only two other schemes in the running for the award for the same category a Wakefield One, with the final announcement coming sometime next month.

The English Cities fund, which is a partnership  appointed Morgan Sindall to the scheme between the Homes and Communitis Agency, Legal & General Property, and Muse Developments, an urban regeneration and property developer, appointed Morgan Sindall was appointed to the scheme.  Morgan Sindall area director, Chris Brown, said that the new civic offices the developer has constructed will fit nicely within Wakefield city centre’s regeneration master plan.

May 28, 2012

Report urges developers to consider smaller cities

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A new report urges developers to consider smaller cities when it comes to selecting sites for new commercial office space construction.

Urban policy think tank, the Centre for Cities, found that smaller-sized cities – especially those in the south – had seen a remarkable lack of new office space development as of late.  Areas such as Cambridge and Reading have been lagging behind in the office capacity department, the report said, even though their economies have been strong, yet there are much less robust markets, like those in Bolton and Blackburn, have experienced a sudden swell of available commercial premises.

The Making the Grade report discovered that development companies had a bias against smaller cities because they considered larger ones to have stronger demand, higher rental values, and a larger number of potential The think tank’s report Making the Grade found developers were biased towards large cities because these offered strong demand, a larger existing pool of potential occupiers and higher rental values.

There should actually be more office development  in smaller cities – theoretically – due to their stronger economic growth.  However, land supply and planning system constraints were limiting this, it said, with the most telling result being that development firms are sometimes unable to increase the amount of additional space in locations that there is potential for growth and high occupier demand.

Office space planning systems need to be modified in order to support additional office development instead of hindering it, the report said, especially where the level of existing demand has been high.

May 25, 2012

Odd mismatch between demand and supply in UK

There’s a bizarre, puzzling mismatch when it comes to available office accommodation in the UK, with some of the fastest-growing towns suffering from office space shortages while areas with weaker economies have experienced a perplexing boom in the amount of available commercial premises.

The mismatch is a ‘striking’ one, according to the British Council for Offices-backed Centre for Cities, as offices are being built in the wrong places according to the existing levels of demand.

80 per cent of medium-sized cities and towns that are exhibiting growth have experienced below average commercial office space growth over the last decade, including Milton Keynes, Cardiff, Northampton, Peterborough, Oxford, and Cambridge, according to the Centre.  The only two places that saw growth above average were found to be Crawley and York.

The average cost to take out an office space rental in these towns and cities is around 50 per cent more expensive than the national average, leading many to spend too much on their office accommodation.  However, even with such a heightened level of demand, supply has simply not kept up within these towns and cities, caused by a lack of office space planning approval and land supply, and exacerbated due to the fact that commercial premises developers target big cities as less-risky investments, since the pool of existing occupiers to choose from is much larger.

The Centre called for cities and towns to work in much more closer concert with adjacent local authorities in order to bring more choice for businesses and developers into their nearby area, work with existing firms to keep abreast of their needs for the future, and keep a higher profile with national property agents.

May 24, 2012

Double-dip recession? What double-dip recession?

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You’d be hard pressed to see any evidence of the debt crisis inundating the eurozone or the double-tip depression that the UK economy has slipped into by examining the London office space market, according to two Shaftesbury and Great Portland Estates, two West End property developers, even as other reports emerge to the contrary.

Great Portland reported a record-breaking amount of commercial office space letting over the last two months.  Its Central London properties, valued at £2 billion, underwent a 9.2 per cent increase in value as a result, Great Portland added.

Overseas investors are driving the upturn in the property market in London, with telecoms, media, and technology companies increasing their office requirements within the West End, said Great Portland’s chief executive, Toby Courtauld.  The West End property market has remained favourable, even in the face of the turbulence facing the eurozone economy and the double-tip recession here at home, Mr Courtauld added.

New space demands made by tenants are trending towards long-term averages, the chief executive said, while new space remains relatively scarce, driving up rent and value.  The telecoms, media, and technology sector has been a particular source of strong interest in keeping Great Portland in the black, said Mr Courtald, whose statements were strongly echoed by Shaftesbury, a developer owning more than 12 acres of West End properties, Carnaby Street included among them.

Shaftesbury chief executive, Brian Bickell, said that the West End of London is still both prosperous and busy, even in the face of economic uncertainties elsewhere, with Shaftesbury’s portfolio being nearly completely let over the first six months of the financial year.

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