In recent years, the technology sector has experienced significant growth within the UK regions. So far this year, take-up from the TMT sector has accounted for 31% of total take-up, significantly up on the preceding five-year average figure of 18%. The UK’s technology sector is continually innovating and growing, with the total number of technology companies in the UK rising by 14% during 2018 alone. Much of this growth comes from startups which often base themselves in the regional cities to save on rent costs, as well as cluster with similar occupiers.

Although economic disruption from Covid-19 poses risks to the UK’s technology startup scene, we do expect to see a wave of new businesses focused on e-commerce, healthcare, gaming and cloud computing starting up in the next few years. Savills believes that each of these sectors are likely to grow as social distancing restrictions redefine how we spend our time. Ultimately, the UK tech sector will remain strong and will play a vital role in helping put the UK economy back on track following the pandemic.

Venture capital raising can often be a key indicator of future demand for office space requirements, as when companies receive significant funding they often use this investment to increase their headcount, and therefore require upgraded office space. So far this year, the South West region has received 20% of the total UK share of venture capital to the technology sector, totalling £4.3 billion, beaten only by London which accounted for 55%. Interestingly, all other regions, excluding the South East, accounted for less than 3% of the total share highlighting just how far ahead the South West is this year.

The South West region is home to over 10,000 technology companies and benefits from an internationally recognised and mature tech ecosystem. Bristol has facilitated the significant growth within the region as it has become known as a hub for both established and startup technology companies in recent years.

Earlier this year, fintech start-up ClearBank signed for 4,000 sq ft at Bristol’s Prologue Works, their first office letting in the city. Last year, ClearBank raised an estimated £35 million in venture funding and was also named as BusinessCloud’s UK 'number 1 FinTech Disruptor’.

However, activity is in no means limited to the South West; neighbouring Wales has seen a recent wave of activity from technology occupiers. In Cardiff, during 2019, challenger banks Starling and Monzo both acquired city-centre office space: Starling Bank took 14,000 sq ft at Brunel House, its first letting in Cardiff, and Monzo Bank signed for an additional 6,000 sq ft at 2 Kingsway. Monzo Bank’s original decision to move into Cardiff in 2017 successfully put the city on the map as a potential UK fintech hub. Starling Bank’s decision to follow Monzo indicates that a new wave of fintech firms could now be on their way into Cardiff, presenting new and exciting prospects for the city’s economy. It's therefore expected that technology occupiers will be a key source of office demand within Wales and the South West region over the next few years.

The West Midlands is home to one of the largest tech clusters in the UK, with Tech and Digital companies contributing over £1.6 billion to the West Midlands economy, and in Birmingham, there are rapidly growing hubs emerging around Aston Science Park and Digbeth, which have both been a catalyst for the growth of this sector within the city.

Manchester is also home to one of the largest tech clusters in the UK which hosts more than 62,000 skilled workers. Their new tech 'neighbourhood' Bruntwood SciTech’s Circle Square development will be a key location for this sector to develop and expand going forward.

Ultimately, the growth of the technology sector shows no signs of slowing and the UK's regional office markets present many attractive opportunities for both startup and established tech firms looking for high-quality office space surrounded by similar occupiers.

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_{Read the articles within Spotlight: UK Regional Office Market Report below.}