UK landlords should prepare themselves for opportunities sparked by the launch of a second phase of government relocations out of London in today’s Budget, writes GVA Grimley.
Stuart Morley, head of research at GVA Grimley, said: “Around Whitehall there are currently about 20,000 public sector posts, most of which don’t necessarily need to be based in one of the world’s most expensive cities.
“As a result, we anticipate a large percentage of these posts being relocated outside of London following the implementation of the first phase of the Lyons programme.
“Those 20,000 posts occupy approximately 2m sq ft of central London office stock, most of which is located in Victoria. While the relocations will present wider benefits to the regions it will also raise questions as to how this volume of vacant stock can be managed in the short term, and which occupiers are likely to move in.”
Morley said a fresh wave of central government relocations will help offset a looming shortage of office space in London and create potential development opportunities. But he added that the question remains at to which regional business hubs will be equipped to attract departments.
“Whilst take up of office accommodation in the UK regions has been holding up surprisingly well, the picture for individual centres has been mixed. Coupled with a wealth of recently completed new offices, the majority of major UK cities now have sufficient capacity to absorb the relocating jobs into high quality, efficient and sustainable buildings, with a number having achieved BREEAM Excellent.”
GVA expects Greater Manchester, Merseyside and the West Midlands to be among those regions that are likely to feature strongly during the relocation programme.
“The government’s own Mayfield scheme will naturally place Manchester alongside the front runners for larger intakes of public sector posts.
“We don’t believe the smaller towns are supported by the demographic profile required to capture the larger relocations such as the Ministry of Justice regional hub. However commercial centres such as Swindon and Derby have a strong offer to make for smaller requirements.
“Location, transport, availability of good quality office accommodation and access to the capital will play a major role in determining relocation venues.
GVA believes a new UK infrastructure bank could be formerly announced within the budget.
It writes: “This remains a key issue given the impact of infrastructure costs on development viability. As pressure to unlock regeneration programmes continues, such strategic investment initiatives will help support local economic growth.
“Access to funds will be key to maintaining momentum for regeneration in the short term. Going forward, regeneration programmes may be lucky to secure three-quarters of what it has enjoyed over past decades so new delivery and taxation models will also be key.”
paul.norman@estatesgazette.com
