Price Wars: Winners and Losers in Q3
Based on stats from officebroker.com’s quarterly City Focus reports, the following graph shows by how much the average cost per workstation has increased or decreased in Q3 this year, compared with the third quarter of 2010.
Data is taken from officebroker.com’s City Focus series – Q3 2011 edition.
City Focus: Q3 2011 vs Q3 2010
Edinburgh led the way in Q3 with a massive ┬ú147 increase on last year’s average price, which settled at ┬ú185 per workstation in Q3 2010.
The average price per workstation in Edinburgh almost doubled to its current average of ┬ú332, but there is talk that this could take a hit over the coming months. Tesco, which reportedly occupied 4000 workstations (approx. 280,000 sq ft) in serviced space throughout the city, have since bought their own property and are set to relocate – which is expected to leave a hole in Edinburgh’s serviced office market and could lead to a drop in price to fill the vacant space.
Manchester and Bristol both saw a positive increase in Q3 2011 of ┬ú41 and ┬ú39 respectively. While Bristol fared relatively well, seeing an increase in enquiries (+28%) and no change in either deals or average license length per placement (9 months), the increase in price is particularly good news for Manchester office providers.
The city saw a drop in other areas including enquiry levels (-18%), deals (-55%) and commitment, which decreased from 9 months to 5 months. Requirements dropped too – falling from an average of 9.1 workstations per deal to just 2.7. However, while Manchester seems to be suffering on the surface, year-to-date figures are more positive. In the first 9 months of 2011 compared to the same period last year, the number of new placements and average license lengths of new deals remained the same, while average workstation price saw a positive increase of ┬ú26, up from ┬ú197 per workstation in 2010 to ┬ú223 in 2011 to date.
Leeds and Glasgow fell marginally below the average cost per workstation recorded in Q3 2010, coming in just ┬ú2 and ┬ú7 lower respectively, but Sheffield failed to live up to the standard set by its Yorkshire neighbour by dropping by an average of ┬ú37 per workstation, and also saw a decrease in average licence length from 9 months to 8 months.
However, Sheffield experienced a chunky upturn in placements (+150%), suggesting that cheaper deals are currently on offer to smaller businesses and start-ups, which is not only filling vacant space but also shows a healthy interest in the serviced market. Of course this also presents the possibility for future internal expansion within those business centres over the coming months.
Birmingham suffered a dismal drop of ┬ú106 in Q3 this year compared to the same period in 2010, the worst performer in comparable price according to our City Focus series.
Enquiry levels are also down in Birmingham (-28%) but despite this, the city managed to attract more signed deals compared to last year, showing an increase in placements of 29%, which suggests that clients could be taking advantage of the cheaper space.
Interestingly, when looking at year-to-date figures (Jan-Sep), average workstation take-up increased (from 3.3 to 6.9 workstations) in 2011 when compared to the same period last year. Average license length year-to-date remained fairly high at 9 months in 2011, just 1 month lower than the 10 month average recorded in 2010, which suggests that existing clients are choosing to stay in their current space for longer, possibly as a result of attractive deals or incentives.
What are your experiences of Q3 2011? Have you seen a noticeable shift in client interest or confidence in the market? Share your thoughts in the comment box below.