National commercial property consultancy Lambert Smith Hampton (LSH) has released findings from its bi-annual Total Office Cost (TOC) survey and it reveals that the cost gap between the UK capital and regional cities is at an all-time high.
Compared with Cardiff, the TOC for a new build space stands at £61.13 per sq ft, almost half of the £120.30 per sq ft cost of London’s Southbank.
Costs in London are running at a record high and it has led to companies to look further afield but satellite towns and cities outside London still command a premium. Moving westwards form London, occupiers can expect to pay £79.59 per sq ft for new builds with the figure barely reduced in Reading to £77.14 per sq ft.
“It is why organisations are looking again outside the South East bubble,” says Lee Mogridge, Regional Director of Wales at LSH, “and with costs still over £71 in Birmingham and £70 per sq ft in Bristol, South Wales now offers clear advantages.”
The TOC includes factors such as net rent, rates, cost of fit out, furniture, services, service charge and operational costs and Mogridge adds: “Beyond costs averaging only 85% of other major cities, Wales also offers a great quality of life for employees.”
It is a message that companies have already acted on. When the last TOC survey was carried out in 2014, US cyber-security firm Alert Logic had elected to open its European Headquarters by taking 20,000 sq ft at Cardiff’s No1 Capital Quarter.
The provision of Grade A space has been vital to attracting businesses to our captial’s centre,” says Mogridge, “and there is clearly the potential for even greater success if the right high spec, high quality space is built.”
The potential for developers is clear as occupiers are willing to pay a premium for spaces which are designed for 21st century business. Rates stand at £7.78 per sq ft for new builds compared to £5.11 for buildings that are 20-years-old.
“Demand for Grade A space is not just sought after in Cardiff,” Mogridge continues, “we have worked with developers who have invested in design and builds in Carmarthen which secured immediate occupancy and Grade A space in SA1 in Swansea is always in demand.
“Our region has a great deal to offer and I am confident that if bespoke commercial space is developed, more companies will recognise that the cost of doing business in Wales adds up.”