Ready, steady, grow! Opportunities to repurpose space in gaming industry hotspots

The global Covid-19 pandemic brought major health, humanitarian, business and economic challenges, the shockwaves of which are still playing out today. From a business perspective, while disruption can massively unsettle and negatively impact operations, plans and profitability, it can also open new streams of less conventional opportunities to explore.

Take, for example, an owner of underperforming secondary commercial real estate stock located within or close to a gaming talent cluster. They may wish to consider the potential benefits of repurposing the space to tap into this flourishing sector. A sector which is stillprimed for growth, following a period of rapid acceleration during the pandemic as people sought out more home-based recreational activities.

In contrast to some other sectors, gaming companies do not necessarily seek space in the most prominent, amenity enabled Grade A office buildings. Some prefer more discrete locations and can be found in a wide variety of spaces, from character buildings, to warehouses, retail premises, manufacturing plants or even old airplane hangars. Companies will pick from a range of spaces to suit their own culture and circumstances.

This growth opportunity is not confined to the larger city markets. Our recent reports, Game ChangersandTech Citiessuggest the geographical spread of gaming and tech talent markets are uneven. Beyond London and the larger regional cities, there are several smaller locations which contain a blend of key attributes, allowing them to punch above their weight as gaming locations. These towns and surrounds also attract significant concentrations of gaming sector employment.

Our findings echo those of the video games industry trade bodyUkie’s Regional Impact Report. This lists a mixture of both towns and cities in the UK where the games industry generates over £60m in GVA. These are Leamington Spa, Edinburgh, Newcastle Upon Tyne, Crawley & Horsham, Manchester, Guildford, Slough, Heathrow and London.

Booming demand from the gaming industry will need to be accommodated. We expect this sector could require an additional 1 million sq ft of workspace in the UK over the next five years. Smaller gaming clusters could benefit from this demand, but with space in short supply, occupiers might need to consider innovative solutions.

A prime example is Leamington Spa, a vibrant regency town and its surrounds, known colloquially as ‘Silicon Spa’. With a 30+ year history, it has become one of the largest gaming hubs within the UK games ecosystem, employing over 2,000 highly skilled people - over 10% of the UK total in games development.

Demand for fit-for-purpose space in central Leamington is strong, with successful gaming studios prime for acquisition. Most recently we have seen a well-known social media technology company acquire a local company and 40,000 sq ft of office space to enable operational expansion.

We have seen other companies queuing for the right space. For example, Sumo Digital occupied temporary flex space in Leamington Spa over two years ago, to enable them to move quickly when the right opportunity came to market. They have since secured 45,000 sq ft at Bedford Street Studios in the town centre This office was speculatively developed from the repurposed House of Fraser store on The Parade.

CBRE are advised that planning has been granted for a similar conversion of retail space within the Royal Priors Shopping Centre - a 1980s centre - to convert a previous Marks & Spencer anchor unit to offices, with interest from gaming studios and other technology orientated clients.

These Leamington Spa conversion projects illustrate the potential of transforming underperforming secondary assets into winning propositions in gaming hotspots where fit-for-purpose space is fiercely fought for. If you have an underperforming asset in your portfolio and are wondering how to unlock its potential, please get in touch.