Research due to be unveiled by King Sturge next week will show that the Government accounted for 40% of all large leasing deals in the UK last year. The public sector is now effectively propping up the majority of UK office markets as demand from the private sector weakens in the face of continued economic uncertainty.
King Sturgeâ€™s Office Markets 2003 report highlights the large public sector deals of 2002 which included tha Lord Chancellorâ€™s Department taking 260,000 sf at Spinningfields, Manchester and 105,500 sf at Clive House in the West End; National Air Traffic Servicestaking 150,000 sf at Solent Business Park, Southampton and HM Land Registry taking 90,000 sf at Plymouth International Business Park. Even in London, the public sector accounted for 19% of office space taken up in the West End in 2002.
Dr Angus McIntosh, Head of Research at King Sturge said: â€œDuring previous downturns in the market since the Second World War, when demand for offices from the private sector slumped, the government frequently stepped in to take up space. We are seeing a repeat of this now.â€
And looking into 2003 and beyond, the increased level of public borrowing announced by the Chancellor will lead to increased demand from the public sector for office space. With demand from the private sector likely to remain comparatively subdued, until the anticipated cautious recovery in the economy in late 2003/04, the government and public sector will remain the developersâ€™ best friend for the next few years.