Demand to outstrip commercial supply


Rob Kerrigan BSc, MRICS has 10 years’ property industry experience and is a commercial agency surveyor, valuer and director at Kempton Carr Croft. After witnessing vast changes in the supply and demand requirements for commercial property over the last decade, here he explains why he thinks development finance isn’t being invested in the right commercial projects.

The UK commercial property market needs to catch up with the demands of businesses to prevent a situation where demand outstrips supply for appropriate office space in the next 18 months, says Kempton Carr Croft, one of the largest independent firms of property consultants in the South.

Permitted development

Due to a change in Permitted Development Rights, a large amount of office accommodation has been removed from the market in the last 18 months. With landlords choosing to change what was previously above-shop office space into residential property, the knock-on effect is that there is now a shortage of smaller office units and ironically, more companies now demanding these smaller units thanks to changes in working patterns.

Business practices have changed

Processes such as HR and admin are becoming increasingly outsourced by businesses which, combined with the spread of cloud-computing and more portable technology offering greater flexibility in staff working patterns, means fewer people are in the office at any one time and companies need less office space to meet their requirements. Even office equipment such as printers and computer monitors are getting smaller which again, leads to a reduction in the amount of desk space needed for each employee.

Supply and Demand

‘What we’re seeing is a decrease in the amount of office space a business needs,’ explains commercial agency surveyor, valuer and Kempton Carr Croft director, Rob Kerrigan ‘Clients who would previously come to us for office accommodation of 20,000 sq. ft. are now looking for space half that size. It’s not the size of their business which has changed, but more that the dynamic of how they occupy office space is changing. The office accommodation available on the market at present is not meeting the needs of modern businesses, yet development finance is, in our opinion being misdirected into large office developments for which there is little market requirement.’

Kempton Carr Croft believes that with the recent changes in market stock coupled with the call for more office space under 5,000 sq. ft., the commercial property market will see supply failing to meet demand in the next couple of years.

New build models

The answer, they believe, would be to create a new build model in which current market requirements are met with high end multi-use development schemes offering quality office spaces under 5000 sq. ft. that is of high specification and can be customised to end user requirements along with warehousing and on-site amenities such as meeting space, gyms, cafés and parking.

Although landlords often shy away from this kind of development for fear of cash flow issues when collecting rents from different businesses and additional complications of managing a development with multiple occupants which can lack the security of sole use long-term tenancy, the demands of the market will escalate significantly over the coming years until developers and landlords are brave enough to accept and trial a different model.

‘The idea of deliberately developing smaller units has only really become a necessity since the market began to change last year,’ says Kerrigan, ‘In our business we’ve heard of only one developer who is bravely taking the decision to try this new tactic and we are confident that this decision will be a good one. This is what the market is crying out for. Developers and investors need to wake up to the changing trends of the UK office market and have the confidence to try a new approach.’


  • Companies tend to need less office space these days
  • Demand for smaller office spaces is increasing, but supply is not
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