Investors are increasingly looking outside the UK’s major cities when it comes to investment opportunities in the commercial market, it has been reported. As a result, smaller cities around the nation are becoming stronger and stronger in terms of their potential commercial property value.
New analysis posted by JLL looked into the performance of the office market across 37 smaller towns and cities across the UK to show just how this particular sector is managing to grow outside of London.
It found that some of these areas have far better potential than London for growth over the next five years, adding that this is based on two particular factors. One of these is the ability to create business clusters, where certain sectors will come together in one geographic area. This creates a level of demand, much like that which has been in Salford in Manchester since the BBC’s move to the area kick started a media hub there.
The other key factor involved was the proximity to universities, with many of the areas that are set to perform well being located close to a campus. The advantage this gives them is the ability to attract skilled young workers and have a strong knowledge base from which to choose. Businesses will also often choose to move to areas where they know courses are offered that are linked to their own industry.
Since the end of 2012, it said that offices in Brighton, Solihull and Reading have become the main appreciators in value, with these having risen by 25 per cent in this period. In the next five years, it added, it expects to see each area welcoming even stronger growth as the trend for investors putting their money into cities away from London continues.
“The outlook for the UK’s smaller cities is now more optimistic than it has been for some time. Our research shows potential performers, including the likes of Oxford and Warrington, should benefit from further capital growth over the coming years as the property market continues to improve,” said Chris Ireland, chairman and lead director for UK Capital Markets at JLL.