Business centres performing strongly despite soaring costs
Business centres in the West Midlands are performing strongly against national averages, according to new research.
The research by CBRE, commissioned by the Business Centre Association (BCA), has shown that the region’s serviced offices, managed workspaces, light industrial space and co-working spaces are all performing well.
The findings, published in The UK Business Centre Market report, show the cost of light industrial space (which makes up 34% of the regional market) soaring above the national average. It now costs £6,616 to lease 500 sq ft of space, compared to the national average of £5,144 a month.
This is said to reflect a strong market with demand for flexible space remaining high. Overall, the cost of business centre space in the region held at just below the national average – unusually for a region outside of London.
However, the report cautioned that the average size of both serviced offices (16,227sq ft) and light industrial space (30,296sq ft) is well below national levels – at 19,327sq ft and 66,340sq ft respectively. This is said to reflect a more general lack of employment space across the region.
More than one third of business centre occupiers sampled in the West Midlands are industrial/distribution firms. Of all the regions, the West Midlands has the lowest proportion of occupiers in the business services sector, just 12% sampled compared with the national average of 27%. The region also has a relatively high proportion of occupiers in the public/charity sector (24%).
CBRE, which surveyed 580 business centres across the country, analysed trends across the sector including its characteristics and customers. Following continued growth, the sector is now estimated to support 93,000 individual small businesses, employing 480,000 people and representing around £18bn of GDP. Turnover in the sector, across the UK, was worth around £3.3bn, up from £2bn in 2013.
Speaking on the impact of the EU referendum on the sector, the chair of the BCA and director of sales at Bruntwood, Andrew Butterworth, said: “After the referendum, almost immediately enquiry levels and demand levels fell…but they have come back and are now tracking long term averages. Business confidence started to return and people decided they needed to crack on with running their businesses. As recent investment and acquisitions attest, the prospects for the future of the sector are extremely positive.”
Whilst the rest of the economy continues to prepare for Brexit, the flexibility, simplicity and community of business centres has made the sector resilient to the Brexit effect with an initial slow down soon subsiding and around 20% of operators seeing growth after the referendum, he added.
More than 90 new centres opened in 2015 and 2016, providing a home for thousands of the UK’s new and growing companies. The evidence suggests that this trend will continue regardless of Brexit as more people take advantage of the terms, services and leading technology provided by business centres.
