How the evolution of the workplace is driving Derby’s office market

For many of us, the coronavirus pandemic has changed the relationship we have with the office – and is having a big influence on Derby’s office market, according to Darran Severn, from FHP Property Consultants.

Here, in a piece written for Marketing Derby, Darran explains how the market has evolved since the pandemic hit, and the move towards spaces that encourage collaborative working and wellbeing:

Over the last 15 to 20 years much of the office take up in Derby has been on Pride Park – the prime business park in the city.

Elsewhere in Derby, there has been a massive reduction in the supply of secondary office space, as the traditional city centre multi-let schemes, such as Heritage Gate and St Peters House, have been converted to residential.

The market has not really blinked at this reduction in supply, as much of the space suffered from a lack of investment over a long period and, therefore, had high void rates.

But it has helped focus the attention to the remaining multi-let offices, such as Cardinal Square, Pentagon House and RTC Business Park.

These have all seen extensive refurbishment and are enjoying high levels of occupancy.

Prior to Covid-19, the market had been pretty strong for the last three to four years, with a continued shortage of properties and an ongoing appetite for good quality space.

Typical requirements tend to be between 1,000 sq ft and 6,000 sq ft, with a couple of exceptions around 10,000 sq ft to 15,000 sq ft.

Larger occupiers tend to be accounted for in Derby and over the last five years there have been few requirements for 20,000 sq ft plus.

Over the last six months, FHP’s office team have seen a steady increase in activity within the office sector as occupiers evolve their thinking in how they wish to use their office space going forward.

While deal activity is undoubtedly down on pre-pandemic levels, we are now starting to see transactions taking place in all size brackets, especially on the office deals up to 3,000 sq ft.

Activity in the larger office market is more limited. Despite this, we have seen a number of large office relocations take place and we continue to have a number of meaningful discussions with larger occupiers.

By far the most important driver from occupiers considering office moves has been a focus on the quality of office environments.

Many occupiers are looking to improve their space to make the office more of a collaborative “lifestyle choice” to boost collaboration, mental health and wellbeing, team building and to support the upskilling of more junior members of the workforce.

Of the enquiries we have been receiving, they look at space both on Pride Park, central Derby or elsewhere within the general city perimeter as they all have a different feel.

The quality of specification nowadays is often consistently good in the refurbished second-hand buildings – and occupiers can put their own mark on them with their fit-out.

Stand-alone buildings can provide a HQ corporate image.

However, easy to drive to and park at multi-let buildings can add a bit more interest, with shared/communal break-out and coffee areas, gardens and staffed receptions.

Overall, the Derby market is healthy and there are a good number of deals being done and there is a selection of high-quality buildings for business to look at.

Rents are still sensible, but with any new build options some time away and supply diminishing, we could see these rents edging up.