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Secondary office space of poor quality accounts for nearly 70 per cent (721 square feet) of all office space in the United Kingdom. The new research by DTZ considers the quality of the office space in the UK, defining them in terms of grades – A meaning prime quality office space, B meaning good quality secondary office space, and C meaning poor quality secondary office space.
The report also revealed a significant variation across the UK market in the proportion of the poor quality secondary space. The biggest proportion of Grade C space is in the minor United Kingdom markets (85 per cent), where a small amount of modern stock has resulted because of low development activity. Outside of the City & Fringes in London likewise has a large proportion (68 per cent) because of the low development activity in the great majority of locales other than West London and the West End. Grade C office space accounts for 54 per cent of all stock in Central London, where the value of land has created a more intense level of superior build quality and development.
“The analysis is an initial step towards sizing the non-prime market,” says DTZ’s Global Head of Research, Hans Vrensen. “This is important given that non-prime property is collateral for much of the £300 billion real estate debt in the UK. The workout of loans against non-prime property still has a long way to go.”
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