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Smaller cities 'need more office projects'

Developers should look to smaller cities for office projects, a report has urged.

The Centre for Cities urban policy think tank said that, despite strong demand, smaller cities in the south had seen relatively little new office space built.

Places like Reading and Cambridge lagged behind in office capacity despite their strong economies, while much weaker markets like Blackburn and Bolton had seen surges in provision.

The think tank’s report Making the Grade found developers were biased towards large cities because these offered strong demand, a larger existing pool of potential occupiers and higher rental values.

Centre for Cities said that in theory economic growth in smaller cities should attract more office development.

But it said this was constrained by land supply and the planning system. “The most obvious effect of this is that developers are not always able to build additional office space in cities where there is economic growth potential and where occupier demand is highest,” it said, adding “we need to ensure the planning system works to support development, particularly where there is high demand”.

The surprise growth in office space in economically weaker places had largely been driven by the public sector, which had subsidised construction but then found it hard to secure tenants and so had rented the space for its own use.

Centre for Cities director of policy and research Andrew Carter said: “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. 

“Local government and the property industry must work together to address this issue as a priority”.

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