Demand for urban office space is changing: cities need more flexibility

A co-working space. Image: StartupHub/Wikimedia Commons.

What does a good office look like? When cities are thinking about intervening in their city centre office market, the temptation will be to simply build more office space. This will be the right call in some cities, but others may already have a plentiful supply of offices. In these places, the quality of the existing city centre office space will be more important, as well as the extent to which it supports the growing trends for co-working and flexible space.

But before deciding how and when to intervene, cities need to first figure out the specific gaps in their local office market where private developers aren’t responding to existing demand. There’s no single national office market, and the quality of offices on offer varies a lot across the country.

The map below – using data from the Centre for Cities’ recent report Building Blocks: the role of commercial space in Local Industrial Strategies – shows that while 39 per cent of offices in Southampton city centre is of a high quality, this drops to only 9 per cent in Coventry and Leicester.

Source: Non-Domestic Energy Performance Register 2018.

But while this data shows the quality of office buildings, it doesn’t tell us much about what occupiers want from offices. The value of offices is determined by the location, condition, and the amenities they are able to offer to occupiers, and understanding the services occupiers are demanding is key for any office market.

One growing trend in office space is the rise of co-working. Collaborative spaces such as WeWork have recently expanded in London and Manchester and in other large cities around the world.

These have two main advantages for businesses – knowledge spillovers and more efficient use of commercial space. Freelancers can rent desks in these offices, devour free snacks and coffee, and meet and do business with other enterprises who have sat down right across from them. Start-ups and larger firms also use the flexibility to easily acquire (or reduce) desks as their needs change, squeezing as much value as possible out of city centre locations by not paying for excess commercial space.

But it’s not just the big cities which are seeing office space change. In our research for the Building Blocks report, we were struck by how many other cities across England and Wales are already responding to occupier demand by providing features such as co-working or ‘easy in, easy out’ flexible leases. Warrington, Bradford, and Bristol are all embarking on co-working spaces of their own.


Demand for these innovations in office space is therefore widespread across the country. For instance, the non-profit IndyCube provides co-working office space in London, but also in cities like Wakefield, Cardiff, Swansea, Newport and over a dozen towns in Wales. Even in urban areas with very small economies such as Rhyl and Abertillery, it is possible to rent a desk, just as you can in the most up-to-date offices in large cities.

Each city should identify any weaknesses in their office market, and justify whether they should respond to them through their Local Industrial Strategy. In some places, this might be providing more high-quality buildings, and in others, it might just be more co-working and innovative space.

Crawley, for example, has a city centre which lacks large offices of 5,00m2 or more, while the average city has roughly a quarter of its office space in buildings in such large offices. Based on the evidence Centre for Cities laid out in our report on the Economy of the Gatwick Diamond, this suggests Crawley could perhaps justify intervening to supply more office space. Other cities such as Preston, by contrast, may have plenty of large offices – but have a shortage of high-quality buildings or innovations like co-working.

When it comes to interventions, cities should only act when it’s clear there is a market failure and the private sector is not responding to existing demand. Huddersfield and Derby have both supplied small amounts of new office space with features such as co-working, one step at a time so as not to swamp local demand, in response to a shortage of office space in the city centre and a lack of new private sector supply.

This is not to say that “build and the jobs will come” justifications for risky speculative office schemes will work – they won’t, as cities should be intervening in commercial property to respond to demand, rather than trying to create new demand. Improving skills and transport provision will be more important than shiny new skyscrapers in most cities.

But in cities where there is an existing kernel of high-skilled work, making sure this activity has the office space it needs in the city centre is an important step for improving local productivity. As work changes, cities should recognise that their commercial space will need to evolve too.

You can explore city-by-city data on office space with the Centre for Cities’ commercial property dashboard.

Anthony Breach is an economic analyst at the Centre for Cities, on whose blog this post first appeared.

 
 
 
 

CityMetric is now City Monitor! Come see us at our new home

City Monitor is now live in beta at citymonitor.ai.

CityMetric is now City Monitor, a name that reflects both a ramping up of our ambitions as well as our membership in a network of like-minded publications from New Statesman Media Group. Our new site is now live in beta, so please visit us there going forward. Here’s what CityMetric readers should know about this exciting transition.  

Regular CityMetric readers may have already noticed a few changes around here since the spring. CityMetric’s beloved founding editor, Jonn Elledge, has moved on to some new adventures, and a new team has formed to take the site into the future. It’s led by yours truly – I’m Sommer Mathis, the editor-in-chief of City Monitor. Hello!

My background includes having served as the founding editor of CityLab, editor-in-chief of Atlas Obscura, and editor-in-chief of DCist, a local news publication in the District of Columbia. I’ve been reporting on and writing about cities in one way or another for the past 15 years. To me, there is no more important story in the world right now than how cities are changing and adapting to an increasingly challenging global landscape. The majority of the world’s population lives in cities, and if we’re ever going to be able to tackle the most pressing issues currently facing our planet – the climate emergency, rising inequality, the Covid-19 pandemic ­­­– cities are going to have to lead the way.

That’s why City Monitor is now a global publication dedicated to the future of cities everywhere – not just in the UK (nor for that matter just in the US, where I live). Our mission is to help our readers, many of whom are in leadership positions around the globe, navigate how cities are changing and discover what’s next in the world of urban policy. We’ll do that through original reporting, expert opinion and most crucially, a data-driven approach that emphasises evidence and rigorous analysis. We want to arm local decision-makers and those they work in concert with – whether that’s elected officials, bureaucratic leaders, policy advocates, neighbourhood activists, academics and researchers, entrepreneurs, or plain-old engaged citizens – with real insights and potential answers to tough problems. Subjects we cover include transportation, infrastructure, housing, urban design, public safety, the environment, the economy, and much more.

The City Monitor team is made up of some of the most experienced urban policy journalists in the world. Our managing editor is Adam Sneed, also a CityLab alum where he served as a senior associate editor. Before that he was a technology reporter at Politico. Allison Arieff is City Monitor’s senior editor. She was previously editorial director of the urban planning and policy think tank SPUR, as well as a contributing columnist for The New York Times. Staff writer Jake Blumgart most recently covered development, housing and politics for WHYY, the local public radio station in Philadelphia. And our data reporter is Alexandra Kanik, whose previous roles include data reporting for Louisville Public Media in Kentucky and PublicSource in Pittsburgh, Pennsylvania.

Our team will continue to grow in the coming weeks, and we’ll also be collaborating closely with our editorial colleagues across New Statesman Media Group. In fact, we’re launching a whole network of new publications, covering topics such as the clean energy transition, foreign direct investment, technology, banks and more. Many of these sectors will frequently overlap with our cities coverage, and a key part of our plan is make the most of the expertise that all of these newsrooms combined will bring to bear on our journalism.

Please visit citymonitor.ai going forward, where you can also sign up for our free email newsletter.


As for CityMetric, some of its archives have already been moved over to the new website, and the rest will follow not long after. If you’re looking for a favourite piece from CityMetric’s past, for a time you’ll still be able to find it here, but before long the whole archive will move over to City Monitor.

On behalf of the City Monitor team, I’m thrilled to invite you to come along for the ride at our new digs. You can follow City Monitor on LinkedIn and on Twitter. If you’re interested in learning more about the potential for a commercial partnership with City Monitor, please get in touch with our director of partnerships, Joe Maughan.

I want to thank and congratulate Jonn Elledge on a brilliant run. Everything we do from here on out will be building on the legacy of his work, and the community that he built here at CityMetric. Cheers, Jonn!

To our readers, on behalf of the City Monitor team, thank you from all of us for being such loyal CityMetric fans. We couldn’t have done any of this without you.

Sommer Mathis is editor-in-chief of City Monitor.