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Fast-growing towns ‘are lacking suitable office space’

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The supply of office space in the UK has not responded to demand, a new report has warned.

Across the country, businesses are seeking suitable commercial premises, but in many towns and cities they are faced with a shortage of options, the Centre for Cities has claimed.

In its new paper “Making the Grade”, which is supported by the British Council for Offices, the firm claims there is “a striking mismatch” between where offices are needed and where they are being built.

According to the report, towns and cities which had higher rates of office-based employment in 1998 performed better over the subsequent decade across a range of economic indicators.

But despite this growing importance of office space in UK towns and cities, the supply has failed to respond to demand.

“To help the country to recover from recession it is essential that buoyant towns and cities with dynamic economies have enough offices to support businesses to grow,” Centre for Cities claimed.

“In eight out of ten of these fast growing places – such as Reading and Aldershot – demand far outstrips supply. Across these towns and cities it costs on average 50 per cent per square metre more than the national average to lease an office for a year.”

“Yet the rate of office building has not responded to these high prices – the increase in office space in most of these cities has been well below the national average,” the firm reported.

Conversely, the firm noted that some of the UK’s more vulnerable economies have seen the fastest growth in floorspace, despite having much weaker property markets.

For example, between 2000 and 2008 around 58 new offices were established for every 1,000 new office jobs in Blackburn.

In Milton Keynes, one of the UK’s fastest growing cities, the figure was 35.

Centre for Cities recommends that urban areas with high demand for offices make a better case to the property industry to ensure its key players are fully aware of local development opportunities.

“To maximise the choice of development options for developers and businesses, cities should work closely with their neighbouring authorities and work with existing businesses to pre-empt growth,” the firm stated.

Andrew Carter, director of policy and research at Centre for Cities, said that some of the UK’s most dynamic towns and cities are not meeting demand for office space and “this could ultimately hinder the growth prospects in those places”.

“In a time of national economic uncertainty, smaller, dynamic city economies will play a key role in kick starting future growth,” he stated.

“Without adequate quality office provision in these cities the service sector, likely to be instrumental on the road to recovery, will not be supported to grow. Local government and the property industry must work together to address this issue as a priority.”