Office markets in Birmingham are likely to be boosted as a result of a new review published by the Treasury.
Yorkshire, the North-west, and Bristol are also likely to see significant new property requirements over the next few years as a result of the Lyons Review, according to property consultants CB Richard Ellis.
The review focuses on the opportunities for Government to relocate functions from high-cost areas of London and the southeast to more cost-effective locations around the UK, bringing welcome news to many of the UK's major regional cities.
The Ministry of Defence (MoD) is already transferring some operations to Birmingham. Although the review focuses specifically on Government departments, Lyons clearly envisages this as part of an ongoing process that could see other public sector-related organisations (such as regulatory bodies, the BBC and the Royal Mail) under similar pressure to review their location strategy.
These regional markets will be attractive to relocating departments because they are not overheated in terms of labour availability, property prices or indeed opportunities for development.
"However, there is a shortage of quality vacant space in all of the regional markets," comments Julian Shellard, chairman of the regional business of CBRE.
"While moves will not be immediate, commercial landlords and developers in cities expected to benefit from relocation should be reviewing their strategies in the light of the review", Mr Shellard continues.
The Government has historically shown willingness to pre-let and exciting schemes exist in many of these markets for which the government would be an ideal occupier or anchor tenant. Ross Bendall, a director in CBRE's Birmingham office agency team, adds: "The city of Birmingham undoubtedly has much to offer any incoming occupier.
"Following on the successful letting of 5 St Philips Place to Government Office for the West Midlands, proposals for Baskerville House present a very similar style of building - a "classical" facade, Grade A space, and large floorplates, providing significant economies of scale in space utilisation - we would expect this to attract interest from any government department considering the city".
In total, Baskerville House will provide almost 200,000 sq ft of brand-new office accommodation, with developer Targetfollow about to commence speculative development of this high-profile, landmark scheme.
Mr Bendall added: "There are a number of other existing buildings and sites all of which could accommodate relocating civil servants - 1 Colmore Square, Colmore Court, Interchange Place, Snow Hill and Post & Mail are all close to Snow Hill station which, with its direct service to London Marylebone, may be important.
"In the city's 'West End', all eyes are on the substantial redevelopment proposals at both Arena Central and Paradise Circus; these latter sites being located close to New Street station, and follow on from the completion of Argent's Brindleyplace."
Inward Investment agencies, local authorities and RDAs will be embarking on a period of intense lobbying to persuade relocatingbodies of the merits of their particular location.
Planners and developers may be their most important allies during the location assessment period, as securing the right building on the best terms will be a key factor in any final decision.
"The past experience of many of these cities in putting together sales teams from the public and private sectors in order to attract overseas companies could now prove invaluable in targeting their own central government," commented Dr Claire Williams, senior analyst at CBRE.
"The full effect may take many years to come through, but if the outcome of the Lyons Review is to encourage organisations to consider location and property as key to their business plans the cumulative impact of these changes will be highly significant in the longer term," predicts Jeremy Freeman, director of CBRE's Public Sector Group.
- Jones Lang LaSalle Birmingham has expanded its corporate offering with the launch of a new consulting team in the Midlands, headed by Sarah Evans.
Ms Evans specialises in working closely with local and international occupiers to help companies reduce their property costs.