Savills estimates that due to the increasing threat of cyber-attacks on British businesses, as much as 1 million sq ft (92,903 sq m) of office space will be taken by cybersecurity firms across the UK regions over the next five years.
With the ongoing creation of new technology, companies must do more to protect themselves and their customers from cyber-attacks and data breaches. Savills latest Spotlight on Cybersecurity report investigates the growth of this sector and what affect it will have on the UK offices market.
Mike Barnes, research analyst at Savills, comments: “UK cyber-attacks are on the increase, with a number of high profile cases hitting the news in recent months. The average cost of a cyber-attack to a business is estimated to be around £20,000 and what’s more, global authorities are considering enforcing tougher regulations and fines. The UK Government is planning to introduce penalties of up to £17 million for companies that do not have the appropriate cyber-security measures in place. Consequently, we expect to see further investment into the sector leading to an increase in property requirements.”
A key indicator of latent office demand in the UK is venture capital (VC) investment. According to Savills, the UK is witnessing an exponential increase in investment within the cybersecurity sector. £220 million of VC funding was deployed during 2017, the strongest year on record and a 116% increase on 2016. Given that the tech sector holds high volumes of client data, Savills anticipates further growth as firms increasingly invest in cyber defence.
Savills notes that since 2007, 49% of funding has been within London posing a challenge for regional cities. Up until this point, investment has been focused around locations that offer training by the government backed National Cyber Security Centre (NCSC), providing strong local talent pools. So, whilst there are currently 25 NCSC cybersecurity Masters degrees on offer across UK universities, 14 of these degrees are currently located in London and the South East.
Savills believes that one way to encourage regional growth is to create key clusters of cybersecurity businesses. One example of this is London based tech accelerator Level39. The project launched cybersecurity accelerator Cyber39 in 2017, which now supports 22 fast growth cyber companies in One Canada Square, marking the largest concentration of cyber start-ups in London. Savills believes that this success story will encourage developers to provide more collaborative workspace to create similar clusters across the UK regions.
There has already been a marked increase in office take up by cybersecurity companies in the past five years, notably Darktrace’s pre-let of 20,000 sq ft (1,858 sq m) at the Maurice Wilkes Building at St John’s Innovation Park in Cambridge. Furthermore, following NCC Group’s acquisition of several cyber companies, the firm signed for 10,500 sq ft (975 sq m) in Leeds and new headquarters totalling 60,000 sq ft (5,574 sq m) at XYZ’s Spinningfields in Manchester, whilst Oxford headquartered Sophos secured the highest Initial Public Offering (IPO) for a UK software company after relocating within Abingdon Science Park.
Jon Gardiner, head of national office agency, adds: “With more companies implementing policies for remote working and more and more people using their smartphones to send and receive data on unsecured public networks, the larger the threat becomes and as a result, occupiers are now expanding their security functions. An increase in VC funding in cities such as Edinburgh and Oxford is likely to see the creation of newly formed regional clusters, which should encourage further growth of the sector and represent a welcome source of new occupier demand for office space.”