Why office developers need to start targeting less traditional areas

That one of our best loved sitcoms is centred around an office in Slough is a testament to the enduring role that the office (lower case) plays in our lives. Yet talk of its demise continues to gain momentum.

The latest challenge the office sector faces is lack of new prime supply. It is well known that the development pipeline in central London has been dwindling for some time, and recent data from Savills shows there is a shortage of prime office stock in many major regional cities, too.

There are myriad reasons for this. Build costs remain high as contractors have their pick of jobs, and labour shortages are only exacerbating the problem – according to the Building Construction Information Service, build costs may rise by 20% by Q2 2027. Meanwhile, there is still reluctance among some employees to return to the office full time, making businesses wary of committing to new space.

Yet Regal London is ploughing ahead with our first standalone office development, The Clarendon Works, a sustainability-driven Grade A central London quality workspace, and we’re developing it in Watford.

Why? Because fortune favours the bold. As shown in recent data from the Office of Rail and Road, one in six of UK rail journeys is now made on the Elizabeth line: if you build it, they will come. Research from IWG and Arup in 2021 found that the average worker needs to travel for 58 minutes to reach a city centre HQ. This goes in some ways to explaining why the regional office occupancy picture can be more favourable than it is for London.

Data from Google highlighted by Lambert Smith Hampton, our joint agents with Bray Fox Smith on The Clarendon Works, suggests that workplace attendance in regional cities has been less affected by the pandemic. According to LSH, data shows workplace visits across the UK in October were around 20% lower than the pre-pandemic baseline, with major regional cities a little below this and those in central London more than 30% down.

Amid a rise in hybrid working and increased focus on employee wellbeing, the argument for more home working is clear – and complementary to that is the argument for more spaces closer to home.

Building sustainable and amenity-rich workspaces locally is clearly beneficial to individual employees. But what about the businesses? Surely there is a lack of demand in so called ‘secondary’ and ‘tertiary’ locations?

Well, a quick search of Companies House data reveals that 155,792 new companies were registered in the first two months of this year alone. 399 of those have ‘Watford’ in their registered address lines – approximately 0.26% of the total – even though Watford is home to only 0.15% of the total UK population.

That’s a very rough way of looking at it, and there are in fact likely to be many more businesses established in or around Watford that may not have the name in their address, but it does show that innovation within our regions is thriving. Those businesses need adequate local provision for their needs now as well as their growth in the future. They will need to pay figures edging closer to £100/sq ft in London if they want space on a par with that at The Clarendon Works.

The demand is out there. Indeed, due to the number of enquiries we’ve received, we’ve had to add two extra floors. The level of demand is not obvious to all because it is as yet largely untapped, but that is where we in the real estate industry have a real opportunity to be bold.

The WFH versus office conversation is over. A third way, with prime offices closer to home, will win out, which raises the question: might we soon see more people take the 15-minute train from London Euston to Watford each morning than the other way round? Might the Elizabeth line soon primarily service not Paddington and Farringdon, but the Slough branch of Wernham Hogg? We’re confident they’ll come – that’s why we’re building it.