Will 2020 mean RIP CBD?
by Richard Sutton, Managing Director, NG Chartered Surveyors
The idea of the Central Business District (CBD) ruled supreme in the 1980s, when the economic boom created huge swathes of new office developments in cities and large towns. City centres shifted, seemingly, forever – but has that now changed, and we have to ask: is the concept of a CBD now outdated for smaller provincial cities? Does it actually hinder their development and evolution?
CBDs have historically been home to highest concentration of development and, as a consequence, the highest rents and land values. But, with changing workplace environments, working patterns and company strategies, is the CBD now relevant to the 21st Century?
Working towards change If cities move away from the concept, then pricing hot spots reduce and investment may become more evenly spread across the whole area, and parts of the city that were possibly stigmatised get revitalised and re-imagined.
Employers like NG want a workplace that encourages collaboration, efficiency and a better work/life balance. Trekking into the CBD doesn’t really achieve this. The demographics of a workforce are changing and it’s now common to have 20-somethings collaborating with 50-somethings in teams. Because of this shift, all generations need to feel comfortable in the environment.
The rise of companies like WeWork and others mean if a city presence is needed for a specific task or project then space can be taken for a week, month or year without the occupier having to take the conventional lease option. Once the project is over the team return to a city fringe, suburb or even rural base.
New research from GKRE said that a lack of office space in Nottingham’s CBD is likely to lead to rising prime rents and at the same time present opportunities for flexible workspace operators emerge. Current flexible workspace occupation in the city is at 90 per cent, the GKRE report finds that flexible workspace prices in Nottingham are also expected to rise over the next 12-24 months.
Technology: the driver of change Proptech and flexibility are also other factors that could diminish the CBD’s role in provincial cities. The new workforce sees things completely differently and uses technology to achieve a better work/life balance and collaboration on most projects.
It could be argued that the CBD is guilty of contributing to congestion and carbon emissions. While Nottingham is perhaps better served than many other cities of its size, public transport doesn’t seem to be having a positive impact on congestion issues in Nottingham just yet.
As for rents: headline rents in what’s left of Nottingham’s CBD are now at £20psf; exactly the same as those on the newest suburban fringe developments. Demand has been equal too, statistics in 2018 showed the take up was almost 50-50 between fringe and core.
There is no doubt that Nottingham city centre is changing and, in many ways, is being “returned to the people”. It’s perhaps too early to say that the CBD is dead – but it is definitely changing. We’ll be monitoring this closely.