The UK government’s Levelling-Up Fund is a positive for economic activity in the regions. Around £4.8bn has been earmarked for town centre and high street regeneration, local transport, cultural and heritage projects. The levelling up agenda will also see the government taking considerable office space in Manchester, Leeds, Liverpool, Wolverhampton, Birmingham & Darlington as departments move out of London.
The issue being that availability of Grade B and C office space across regional markets in England has fallen by 45 per cent since 2015. Excluding London, 31m sq ft of office space has been converted to residential under Permitted Development Rights in England. At the same time, there has been limited speculative regional office development, a key reason why the total available office supply has declined 17 per cent since the end of 2019.
This is clearly good news for property companies with a strong regional bias at a time when more London and South East based businesses will also be considering the relocation of some of their operations to generate cost savings, or implementing a 'hub and spoke' model with a greater regional presence to meet the demands of employees. One such company, Palace Capital, is a major beneficiary.