The first two months of 2020 have been characterised by a number of themes, but one that has caught my eye is a surge in organisations announcing that they are considering a move or office expansion outside London, often termed ‘northshoring’ (opposed to ‘offshoring’ – moving functions oversees to capitalise on lower labour costs). The last time that I wrote about northshoring was back in 2015, so why is it back on the agenda in 2020?

Political change has definitely played its part, with much speculation about whether the votes of 'Workington Man' that helped get Boris Johnson elected, will lead to civil servants being relocated from London, or even the House of Lords. I’m always slightly sceptical as to whether civil service relocations ever happen on the scale that is sometimes suggested, although there have been previous periods of large-scale moves from Whitehall in the past. Indeed, the unoriginality of the concept is perfectly illustrated by a December 1987 episode of the TV series Yes Minister entitled 'Man Overboard'. The reasons given for not relocating service personnel sound as plausible today as they did back then. However, the fictional security arguments made in the late Eighties might be difficult to support in reality now, seeing as GCHQ acquired space in Manchester last year.

Rather more likely is the suggestion that the BBC will move two thirds of its staff outside London by 2027. This would involve relocating more than 3,000 employees into regional cities, including to a technology hub in Newcastle. On the theme of tech hubs, Goldman Sachs has also recently announced plans for a 60,000 sq ft centre in a UK regional city.

Clearly northshoring is back on the agenda, for whatever reason. The next question is which city will win as, when it comes to footloose occupational requirements, it is very much a competition. 

Leaving aside purely political moves, the number one question that office occupiers want answered is about the workforce – are there enough people with suitable qualifications; how good is the educational infrastructureand graduate retention; and what are the pay differentials?

A sub-par labour pool is an instant black cross. Local transport infrastructure and the housing stock and supply are both currently very topical, as well as being important attractors. However, from a local authority point of view, just investing more money in public transport does not necessarily make a city more attractive.

The final part of the equation is the one that is nearest to my day job: is there enough suitable office space in the city? This could be a problem for any planned northshoring, with Birmingham, Manchester, Edinburgh and Glasgow all having less than half a year’s Grade A supply at present. Furthermore, 55 per cent of the development pipeline outside London is already pre-let.

Tight supply and strong demand means that office rents will rise. While this might be less of a concern for a central London-based business, it could raise challenges for local companies who do, after all, drive the economies of their home cities.

Further information

Read more: Structural change