Jane Taylor, Regional Director in our Leicester office, has spent months researching Leicester’s offices sector.
Here, she explains the findings of City Mayor Peter Soulsby’s Office Market Review and what can be done to attract businesses to the area.
Battle to attract businesses to the city
Since Lehman Brothers collapsed in 2008, the commercial property market has been hit by crises in credit markets and weak economic growth.
Like most UK cities, Leicester hasn’t escaped the effects of the downturn. With the forecast for the next 10 years being one of further decline for the offices sector, there’s a battle ahead to attract businesses to the city.
Review commissioned earlier this year
The good news is that Leicester City Council has recognised the importance of the office sector to the city’s future success and the need to create and sustain further grade A office development.
Following extensive research by LSH the Office Market Review has been published. The aim of the review is to explore the barriers to development and consider ways to overcome them.
The research involved a number of threads including semi-structured interviews with key professional office occupiers throughout the city and out of town markets to establish issues affecting their decision on how and where they occupy property.
Key disincentives for locating in the city itself included levels of car parking, the lack of high quality space available within a suitable timeframe and quality of the public realm; whilst positives included proximity to the station and a general desire to be in the city for networking opportunities.
Professional occupiers favour city centre location
Although for many professional occupiers the city would be the preferred location if their requirements could be met it is important that the city and out of town markets complement each other, catering for the differing needs. Out of town locations are key for attracting regional motorway-related office occupiers.
Red tape and costs among main concerns for Developers
Developer interviews highlighted issues involving in the main, viability of schemes under current market conditions, planning obstacles, empty rates liabilities and prohibitive infrastructure costs.
From economic modelling demand for floorspace is forecast to be 53,300 sq m for the period 2012 to 2031, driven predominantly by the need for renewal of old stock.
Three sources of structural decline identified in city's office market
The study identified three sources of structural decline in the Leicester city office market: the obsolescence of aging office stock; a higher than average run down of the civil service office estate; and the lack of grade A offices resulting in the failure to retain existing occupiers and attract potential inward investors.
Action plan agreed
To bring forward the provision of grade A offices the study identified opportunities for the city council to promote the city centre market and an action plan has been agreed which includes:
• office development over 100 sq m will no longer be restricted to the New Business Quarter. Proposals for office development on other sites will be encouraged.
• policy will be revised to allow for a less restrictive approach to car parking requirements.
• planning and development officers will work with existing site owners to establish early planning advice. This will ensure that if land owners and developers have potential occupiers they have already established all planning and highway requirements as far as possible, so that applications can be fast-tracked.
• a newly-formed Commercial Office Market Forum will ensure the council has links with property agents to ensure information and assistance can be provided to support property enquiries, and an annual office market review will be produced.
• the council will look at its own land and property assets to see if it can bring forward possible development opportunities.
• the council will work with partners to look at the potential of setting up a revolving investment fund. This would enable developers to borrow money to put in roads or other infrastructure to get developments kick-started.
Positive outlook for the city's future development
I believe that if the action plan is implemented we will see an increase in new office developments, existing space being refurbished and, ultimately, more businesses being attracted to locate in the city centre.
The Leicester Office Market Review Executive Summary can be seen at http://citymayor.leicester.gov.uk/thrivingcitycentre/