UK Gaming Sector Set For Exponential Growth, Says CBRE

Driven in part by the pandemic and people looking for recreational activities to do at home, the UK gaming sector has grown rapidly and is now ranked 6th in the world. The explosion in popularity, means the sector could require up to 1 million sq ft of workspace in the UK over the next five years, according to a new report Game Changers published by global real estate advisor CBRE.

Take-up of workspace by the gaming sector in 2021 was at its highest level on record (272,000 sq ft). In the context of a below-average year for the UK office market in general, this highlights the strength of the gaming sector which accounted for 2% of total take-up, the largest ever amount on record.

With the allure of greater rewards, the gaming landscape is being transformed. Record levels of studio acquisitions are taking place, as companies seek to expand their player bases by bringing in new franchises. Traditional gaming companies face competition from small indie developers, which benefit from lower barriers to entry. In addition, well known tech and media giants are joining the action, spurred on by cross media integration and multi-channel storytelling.

With gaming talent thin on the ground and so fiercely fought for, companies must use every tactic to attract and retain the highly skilled people that are essential to business growth plans. Key to this is location selection. CBRE’s own office occupational deals data shows the popularity of London, the South East and several of the larger UK cities as gaming sector locations. In the past 10 years, CBRE has tracked over 1.1m sq ft of office take-up by the sector across the UK.  Around 540,000 sq ft of this occurred in London, followed by Leeds, the South East of England, Edinburgh and Manchester. Of the five largest deals, mobile gaming companies have been the most prevalent.

In addition to the larger markets, there are a number of smaller locations where there is a significant concentration of gaming sector employment as a proportion of total employment, (where some notable companies have started from and then stayed). This includes smaller and less trendy locations such as Dundee, Horsham, North Kesteven in Lincolnshire, Guildford, and Royal Leamington Spa (nicknamed ‘Silicon Spa’).

Aside from making the right location choices for their businesses, winning workspace design is also a primary weapon in the gaming sector’s war to attract talent and build loyalty. The mix of real estate varies according to factors such as company size and whether product testing is kept in-house or outsourced but can include: core office space, smaller bespoke studio facilities for games development incorporating both dedicated individual and team space, audio rooms, play/test rooms and outlier spaces such as motion capture studios.

In contrast to some other sectors, gaming companies do not necessarily seek accommodation in the most prominent, amenity enabled Grade A office buildings.  Some even prefer to go without signage and can be found in a wide variety of spaces from character buildings, to warehouses, manufacturing plants or even old airplane hangars. Companies will pick from a range of spaces to suit their own culture and circumstances and shape the design and support services to promote employee productivity, team engagement, collaboration, alongside health and wellbeing.

Whilst gaming is undoubtedly seeing huge growth, it also faces its challenges. Unprecedented investment is forcing even the smallest companies to rapidly upscale, with many founders being ill equipped to deal with such sudden change. To keep up with growth, gaming occupiers often try to build more flexibility into their environment, yet need to ensure that physical space is able to adapt to the rapid change often seen within the industry.

Andrew Tinney, CFO, Wargaming commented:

“The videogames industry is known for its speed and agility, and it is adapting rapidly to the seismic shifts we are seeing in the workplace. Our emphasis will always be on fostering creativity and innovation. We therefore need to ensure we have the most meaningful and effective environment to enable that creativity and innovation. How our talent needs to work and collaborate in a hybrid and increasingly geographically dispersed working world is at the core of our planning and decision making.”

Expansion of the global gaming sector will continue to bring increased requirements for office and studio space into the UK, but the implications for the real estate industry go far beyond this. Growth in the gaming sector will also trigger additional growth across supporting ecosystems, from Data Centres to eSports arenas across the country.  Gaming platforms are also set to provide the building blocks of the emerging Metaverse, which could further accelerate organic growth and M&A activity across the sector.

Mike Gedye, Head of the Technology sector vertical at CBRE

The huge level of workspace take-up across the gaming sector in 2021 is symptomatic of a burgeoning industry, not in just in London but across the UK. With the sector anticipated to reach record levels of growth over the next five years there is all to play for, with those who put in place the right strategies to mitigate accelerating change, reaping the rewards.

Jen Siebrits, Head of UK Research, CBRE