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To unlock more Grade A office space we need to revise its definition, says Colin Wood, Director, Turner & Townsend

When it comes to the office market, it’s always going to be about Grade A. But when it comes to delivering that space, the UK’s scorecard is currently more of a D-minus, Colin Wood, Director at Turner & Townsend, tells us.

01/04/2019 3 min read
Colin Wood Turner & Townsend

The supply of Grade A offices has been waning for some time now and the continued unpredictability surrounding Brexit has only exacerbated the problem. Landlords and developers are exercising caution towards investing in commercial stock across the UK, further slowing the flow of new schemes coming to market, widening the gap with growing occupier demand and pushing rents higher.

There isn’t one single – or simple – solution to this shortage. Instead, we need to see a fundamental shift in the way we approach commercial office development at all levels of the market – from the requirements of occupiers, to the ingenuity of landlords and commitments of planning policy.

With supply thin on the ground and rents notching up, occupiers need to be thinking more carefully than ever about location – or rather, relocation. London office vacancy is at a near 15-year low according to CoStar Group, and employers are increasingly seeing the benefit in having back of house operations and support services in lower cost cities. The Government’s championing of the Northern Powerhouse and Midlands Engine has helped encourage businesses and their staff that there is life beyond the capital. The Government Hubs Programme is also leading the charge with the transfer of departments to various regional cities, and a commitment to move a thousand civil service roles out of London by 2022.

But wherever they are, occupiers today need to be maximising their space. This includes introducing more flexible, agile working patterns and freeing up permanent desks. This should be informed by research and data on work habits. Occupiers need to be investing in and implementing technology solutions such as sensors or WiFi scanning to analyse how a workspace is being used and how to operate it more efficiently.

Similarly, it’s only by grasping the revolution in the way people work and what they now expect from the workplace that we can boost supply by re-modelling and refurbishing existing ageing stock appropriately.

The rapid rise in coworking space has certainly challenged traditional commercial landlords and developers to look again at their own offer. Occupiers now want more communal areas to help foster collaboration and knowledge sharing, and more amenities to attract and retain employees. They also want office space that reflects the values of their organisations and employees – and wellbeing and sustainability are high on the agenda, reflected in the rise of the Well Building Standard and FitWel certification.

Landlords need to enhance the environmental performance of existing lower grade office space to attract the next generation of occupiers.

Crucially, the landlords of tomorrow recognise that what marks Grade A out from the crowd is the improved user experience. It’s technology that allows smoother access to all parts of the building, facilitates better connectivity to colleagues, and ultimately helps businesses operate more efficiently.

Given the extent of the shortage in the market, it’s important we see a consistent policy response too. There have been some steps in the right direction, including the draft City of London Local Plan pushing for an extra two million square metres of additional office space by 2036. But Government legislation and local authorities across the country need to be encouraging Grade A office development by including greater allowances for commercial space to be built within local plans.

Furthermore, there should be policies in place to prevent investors from simply purchasing existing offices and leaving them to degrade, capitalising on the buoyant demand in the marketplace and knowing they can easily let the space without refurbishment.

It’s only by taking a multi-faceted approach that the lack of Grade A office space in the UK can be addressed. Local authorities, occupiers, developers and commercial landlords all have a vital part to play in ensuring we have the right, high-quality workspaces that we need for businesses and their employees to thrive.

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