Savills: hunting for talent

Business expansion is linked to the availability of talent, which possesses the skills required for the jobs of the future, says Savills.

The sectors that have been driving demand since 2018 are Technology and Media, followed by Professional and Business services, according to Savills. In some markets (such as London and Warsaw) flexible office providers also captured a large share of the market activity.

These sectors have gradually replaced the Banking and Finance sector, which used to be the dominant driver of occupier activity during the past peak of the business cycle.

Savills added that the Technology, Media and Communications sectors, as well as flexible office operators themselves, typically grow in cities that attract and retain young talent. Savills looked at the evolution of young talent employment over the past five years and compared it to the evolution of the office market, notably the development of prime rents.

Eri Mitsostergiou, a director in Savills commercial research, explains:  

“We have found a very close correlation (0.95) between the two indicators, which implies that companies are attracted by the availability of young talent and choose to expand in cities where there is supply of tertiary education graduates, in combination with good quality of life and modern infrastructure.

“The cities that demonstrate the highest correlation between employment of young graduates and prime office rents between 2014 and 2018 are Dublin (0.97), Paris (0.91), Berlin (0.89) and Amsterdam (0.89). Over the past five years these cities have experienced strong rental growth and dynamic take-up trends too.

“The next tier of cities are peripheral cities in recovery phase, such as Lisbon, Athens, Bucharest, Barcelona, Madrid and Warsaw, where the improvement of the participation of young education people in the labour market is critical for the economic recovery and growth. Indeed, the Spanish cities and more recently Lisbon have demonstrated a significant increase in young talent employment, from 76% or less five years ago to 85% or higher, when the EU target is a minimum of 82%. In parallel, they have also experienced strong office rental growth over the same period.

“On the other hand, Athens is just in the beginning of this process, with an improvement of young talent employment to 67.5% last year from 54% in 2014 and the first signs of improvement in office demand are also evident. With competitive labour costs it could be a destinations for companies in search of young talent labour availability.”

Markets with more mature and diverse economic base, where more traditional sectors, such as Finance, Banking and Professional services remain quite strong drivers of office activity, there is less correlation between the two indicators (Brussels, London, Milan). In this category also belong cities where the participation of young talent in the labour force has already been high since 2014 (Stockholm, Copenhagen and Frankfurt – over 90%).

Savills’ Mitsostergiou added that rising participation of young talent in the labour force is expected to continue, as recent graduates possess many of the skills required by the growing new industries.

james.wallace@realassetmedia.com