‘Northshoring’ driving lettings for Bruntwood
BRUNTWOOD’s chief executive Chris Oglesby says lettings at the firm are partly being driven by “Northshoring”.
In the group’s annual accounts Mr Oglesby explains this is the process of London-based companies trying to cut overheads by moving to cheaper regional cities.
The Manchester-based group had its best year for lettings in 2012 since 2007, with a 10% increase from 480,000 sq ft to 600,000 sq ft.
Mr Oglesby admitted this was partly down to increased market share where the firm is active in Manchester, Liverpool, Birmingham and Leeds, but he identified five factors having a positive impact.
Aside from Northshoring he cited: “onshoring”, where operations that have previously been relocated abroad are moved back to the UK; a move back to cities from out-of-town sites to attract the best talent; regional cities winning inward investment deals; and, the expansion of the technology sector in the regions where “the skills demographics and labour cost balance is better suited to these businesses”.
He said: “It does, however, remain difficult to secure new customers and retain margins in what remains a very competitive market. Although we have managed to maintain our headline rental levels, we have had to discount new lettings with initial rent free periods and stepped rents.
“There are signs, however, that the supply/demand position in our markets is starting to return to equilibrium, due to the lack of new development and major refurbishment, and with it the level of these concessions are starting to reduce.”
Bruntwood has recently refinanced and Mr Oglesby even found space in his report for some sympathy for the banking industry.
“The banks are in a very difficult position at the moment, with the regulator limiting their ability to lend whilst the politicians blame them for not lending enough.
“Whilst the sector needs to clean up its act, market forces are doing this very effectively for now and the time for further regulation will come, once the economy starts to pick up again. For now we are in danger of severely damaging an industry in which we lead the world.”
In the year to the end of September pre-tax profits increased by 10% to £12.4m and turnover rose by 6% to £105m. The company also revealed it spent £7.6m acquiring a controlling stake in Manchester Science Parks.