London and New York are arguably the world’s two
great global cities. Different but remarkably similar, the
two have been locked in transatlantic competition for
decades. Each has enjoyed a period of preeminence,
often reflecting the relative power of the financial and
business clusters that have evolved in both.
But what about the other big cities in the UK and U.S.?
Each city is of course unique, but will globalisation and
urbanisation increasingly pitch these cities against each
other in a kind of NFL (National Football League) and
EPL (English Premier League) playoff? CoStar data and
analysis suggests that this is an increasing probability.
CoStar tracks activity at a corporate, tenant, and
building level in all U.S. and UK cities. Our data for the
six largest office markets in the U.S. and UK, excluding
New York and London, reveals that office take-up is
largely driven by professional services; technology,
media, and telecoms (TMT); and banking and finance
(see Exhibit 1). This is especially true of the UK whereas
the U.S. is rather more broadly based, with the public
sector, retail, manufacturing, and energy sectors making
a bigger contribution.
These key corporate sectors are increasingly footloose,
whichmeans U.S. andUK cities, andmany others globally,
are in a race to attract and retain these companies.
Some will succeed and others struggle. Typically these
businesses tend to cluster where there is good access
to the right kind of talent, customer markets, finance,
infrastructure, and property, amongst other draws. This
is especially true of the TMT sector, which has tended to
cluster in CBDs and certain out-of-town locations.
San Francisco, unsurprisingly, is by far the largest
destination for TMT, which took up nearly 6.8 million
SF of office space in 2014–15, equivalent to 26% of
office take-up (see Exhibit 2). However, what is perhaps
surprising is that Bristol (22%), Edinburgh (20%), and
Glasgow (12%) are in the top six cities in terms of the
relative importance of TMT. These are increasingly
internationally important TMT centres attracting firms
from across the globe, including U.S. companies such as
IMDB and Hewlett Packard in Bristol. Similarly, FanDuel,
the U.S.-focused fantasy sports provider took 60,000
SF of office space in Edinburgh in 2015. Cirrus Logic, a
U.S. software firm, took a similar amount. Dell expanded
its Glasgow operation, too.
EXHIBIT 1: % OF OFFICE TAKE-UP BY KEY CORPORATE
SECTOR, 2014–15
EXHIBIT 2: % OF OFFICE TAKE-UP BY TMT, 2014–15
SOURCE: COSTAR GROUP AS OF 16Q1
SOURCE: COSTAR GROUP AS OF 16Q1
0
5
10
15
20
25
30
35
40
Banking & Finance
Professional & Business Services
UK US
TMT
CITY
TMT LEASING (sq ft)
% SHARE
San Francisco
6,785,777
25%
Bristol
452,815
22%
Seattle
3,955,567
21%
Edinburgh
410,797
20%
Washington, D.C.
5,897,212
15%
Glasgow
253,144
12%
Manchester
408,073
10%
Leeds
221,601
10%
Chicago
3,638,304
10%
Birmingham
269,113
10%
Boston
3,083,589
9%
Los Angeles
2,459,497
6%
NFL Vs. EPL:
IS COMPETITION BETWEEN NEW YORK AND LONDON
WIDENING TO ENCOMPASS THE OTHER BIG NATIONAL
CITIES?
22 | Cushman &Wakefield