COMMENT While total office take-up in Cardiff in the first half of this year remained broadly in line with the five-year H1 average for the market at 148,463 sq ft, we have seen a dramatic shift in the demand profile for the sector across the region. Since the Covid-19 pandemic, occupiers have more clarity on the way that their offices are used and are therefore ensuring that the space best suits their need – prioritising features such as breakout spaces, which are offered through higher-quality spaces.
Before the pandemic, the public sector dominated the office market at 29%, followed by technology, media and telecoms at 16%, and then the professional sector at 11%. After the pandemic, TMT expanded to 19%, the insurance and financial services sector to 18% (pre Covid it was 9%) and the public sector reduced to 18%. Professional services now account for just 8% of the office market.
Public services, education and health continue to outpace the UK average for take-up, with the 2021 ONS Business Register and Employment Survey concluding that 32% of the jobs in Cardiff were in the public sector. However, whereas it has historically been the most active sector, data shows that take-up has diminished by 11% following the pandemic. Earlier this year it was revealed that nine in 10 of the country’s civil servants work from home, with plans to reduce the regional civil service relocation programme by 25% possibly further hampering demand for office space. In terms of what this means for the wider market, we are likely to see growth in occupier demand among alternative sectors in the city.
One sector that has been fundamental in the changing face of the city’s office market is TMT. Research shows that the pandemic accelerated the rate at which consumers have moved toward online channels, and as a result there has been a significant leap in businesses creating digital or digitally enhanced offerings. Unsurprisingly, we have seen a boost in demand for office space in the sector; the Welsh tech sector is now worth an estimated £8.2bn and employs almost 40,000 people. The trend is showing no signs of slowing, with the tech-arm of entertainment venue Tramshed, Tramshed Tech – an ultra-connected community of tech start-up and scale-up businesses – recently occupying new office space at One Central Square.
The insurance and financial services sector has seen the fastest expansion in the city since the pandemic, overtaking the professional services sector with a 9% growth in demand. The sector has always had a strong presence in the region, with Cardiff-headquartered insurer Admiral Group setting up in 1993 and today employing almost 8,000 people in the region. The growth of the financial and professional sector in Wales has also driven the fintech sector, which has made up almost a quarter of the £144m (over 87 deals) in venture capital raised since the beginning of 2020. Monzo Bank’s original decision to move into Cardiff in 2017 paved the way for fintech firms to also make the move, with Starling Bank following suit and establishing its biggest employee base in the region.
It’s clear that occupiers want the best workspaces to enhance employee productivity and wellbeing, as well as the attraction and retention of talent. And although the demand profile of the office sector in Cardiff has changed, buildings play a more pivotal role in achieving wider corporate goals and positive workplace culture than ever before.
Gary Carver is director for office agency, Cardiff, at Savills
