South West sees 200% increase in office space take-up
According to officebroker.com’s figures for serviced office space take-up in the South West, August 2009 has produced the highest figure of the year to date, representing a 200% increase over the same period last year.
As shown by the below graph, the South West has shown overall improvement in take-up since May 2009. Despite a slight drop in July, the figures signify a period of growth which is represented by a sharp increase in take-up when compared to the same period last year.
The overall shape of new occupiers, particularly the increase from July to August 2009, also promotes a favourable outlook for the remainder of Q3 and into Q4.
This is in contrast to the same period in 2008, where new occupier figures peaked sharply in April, before embarking on a month-by-month deterioration which continued until August 2008.
The below graph shows office space take-up trends for the first 8 months of both 2008 and 2009.
The steady decline in 2008 could have been as a result of the recession taking hold and an increased lack of business confidence, which is also expected to be behind 2009’s slow start to the year, as well as the slight drop in take-up in May 2009.
However, over recent months business confidence has ascended rapidly. In a UK Business Confidence Monitor Report produced by the Institute of Chartered Accountants, Q2 saw an improved rate of business confidence in comparison with Q1, which then broke into positive territory at the start of Q3 for the first time since 2007.
The effects of this are at least partly reflected in the above graph, as take-up increased throughout parts of Q2 and the first two months of Q3, which is consistent with the results of the survey.
Jobs market adds to UK business confidence
Further signs that the UK is nearing the end of the economic decline are shown by the UK jobs market, according to a survey of recruitment agencies.
A report by Markit Economics finds “marginal increases” in both permanent and temporary appointments in August, as well as a decline in the number of vacancies, as reported by BBC News.
Chief economist for Nationwide, Martin Gahbauer said: “A number of key economic indicators continue to show that we may have reached the bottom of the current recessionary cycle.”
Take-up continues to rise despite increase in average cost of workstation
Where the price per workstation is concerned, the South West’s first eight months of 2009 are down just ┬ú17 on the monthly average when compared to the same period in 2008.
Month-by-month, the average cost per workstation over the last three months of 2009 is up over the same period last year, which matches the increase in take-up figures. The fact that take-up has continued to rise over recent months despite the increase in the average cost per workstation, suggests that businesses may be becoming less concerned with negotiating cheaper rents and are potentially looking to obtain a higher standard of office.
This again points to an overall stronger and more confident business sentiment in 2009.
Other factors that could contribute to the uplift in office space take-up are shorter initial licence lengths of new occupiers. The average length of new license dipped as low as 3 months in March and April 2009. In contrast, the lowest figure for the same period last year was 6 months.
While this may suggest that new occupiers in 2009 are proceeding with caution, this would contradict the higher levels of take-up and business confidence seen over the last few months of 2009. Businesses may be more keen to sign up for office space as a result of shorter initial license terms, but potentially with a view to extend their licenses as and when necessary.
Such flexibility is one of the biggest advantages of serviced offices, and is naturally a key selling point for businesses during an economic downturn.
Bristol and Gloucester office space activity
Traditionally the most popular city of the South West is Bristol, the largest centre of culture, employment and education in the region.
However, officebroker.com figures show that Gloucester has crept up in the popularity stakes and has outrivaled Bristol to produce the highest level of take-up out of all South West locations in August 2009.
The below graph represents South West office space take-up in August 2009, by location.
Despite being pushed into second position by Gloucester, Bristol performed relatively well in 2009 compared with the first eight months in 2008, with six out of eight months producing a higher level of new occupiers this year when compared to the same period in 2008.
Bristol’s average cost per workstation has also showed signs of improvement, having started the year with dramatic peaks and troughs that have begun to level out over the second quarter and into Q3. August 2009’s average workstation cost of ┬ú242 is just ┬ú22 behind the year’s highest point in March of ┬ú264. The lowest average cost of the year so far was February with ┬ú141.
Gloucester maintained a consistent level of take-up throughout 2009 which shot up by 300% in August from July’s figure. This was despite an increase in average workstation cost of more than double the previous month, bringing August to an average of ┬ú348 per workstation, up ┬ú178 from July’s average of ┬ú170.
Therefore amidst signs of a stabilising economy, the South West’s serviced office space market – spearheaded by Gloucester and Bristol – is currently producing a positive set of positive results which suggest further room for growth in Q3 and into Q4.
For further details of serviced office space in Bristol, Gloucester, or in other South West locations such as Bath, Swindon and Plymouth, visit officebroker.com to find and compare offices, or contact us to get free help and advice from one of our regional office space consultants.