New research from LSH shows that gap between the capital and the North is closing
The cost of occupying offices in the core Northern Powerhouse cities is rising faster than Central London, according to new research.
National commercial property consultancy Lambert Smith Hampton (LSH) examined the average cost of occupying a new build office compared to a 20-year old office building across 54 UK locations for its Total Office Costs Survey (TOCS). *
It found the average cost of occupying both new build and 20-year-old office space across the North of England increased by 3% in the 12 months to April 2018.
The average cost of a typical workstation across the core cities of Leeds, Liverpool, Manchester, Newcastle and Sheffield now stands 45% below London’s Midtown district – narrowing from a peak of 53% in 2016’s equivalent survey.
Sheffield saw the largest percentage increase in occupier costs for a new office building, rising by 5.4% over the 12 months to April 2018, followed by Leeds (3.1%), Newcastle (2.2), Manchester (1.1%) and Liverpool (0.7%).
Manchester saw the strongest growth in occupier costs for a 20-year old building, rising by 5.4%, followed by Leeds (4.9%), Sheffield (4.4%), Liverpool (1.1%) and Newcastle (1%).
Manchester is the most expensive location in the North for a second successive year, with average annual costs of £7,194 per workstation, followed by Leeds (£6,614), Newcastle (£6,383) and Sheffield (£5,897). Liverpool is the most cost-effective location at £5,503 per workstation.
Oliver du Sautoy, Head of Research at LSH, said: “The survey reveals the gap in costs between the UK’s main regional cities and London has narrowed from an all-time high in 2016. This reflects the continuation of rental growth in the major regional cities, alongside stable rents in the capital.
“While the financial case for relocating out of London may be compelling, the figures may help to explain why the expected wave of inward investment into UK core regional cities has been modest over the past 12 months.”
Josh Levy, Director of Office Agency at LSH Manchester, commented: “Despite the gap narrowing, northern cities still offer a significant cost advantage to their Southern counterparts. Factor in the high cost of living in London, with recent research suggesting that that record numbers of people are leaving the Capital when they have children and want to put down roots, and it’s only a matter of time before even more businesses look to relocate or expand their presence in the North in order to attract and retain the best talent.”
TOCS is the most definitive independent survey of its type, with cost data supplied by LSH and leading industry suppliers.
Across the 54 surveyed locations, the average cost of occupying a new build office in the UK increased by 2.6% and the same figure for 20-year old buildings was 2.7%.
Of the 54 surveyed markets, Bristol saw the largest percentage increase in occupier costs for a new office building, rising by 9.8%, followed by Exeter (9.3%) and Cambridge (6.1%). Brighton saw the strongest growth in occupier costs for a 20-year old building, rising by 7.8% over the year to April.
London’s West End remains the most expensive UK office location, with the annual cost for a new office in Mayfair at £18,142 per workstation, 134% above the UK average and 48% ahead of next most expensive location, London’s Midtown district.
*Total office costs for Manchester’s new build offices is £73.92, versus £69.95 for its 20 year old office buildings, for Liverpool’s new build offices it’s £56.17 versus £53.89 and for Preston it’s £53.53 versus £48.40
