The UK Business Centre Market - Business Centre Association
The UK Business Centre Market A Report for The Business Centre Association (BCA) by IPD and Snapdragon Consulting October 2014
Next page
// Executive Summary
The UK Business Centre Market
Executive summary
£2bn “The provision of flexible business space is a crucial pillar for any successful economy. To allow companies to flex their growth according to demand, need and cost is fundamental for most industries striving to develop. Over the past decade we have built a highly successful and valuable business not only for our shareholders but also for our Team and our clients, and I can say very honestly that we could not have achieved this without having access to variable and flexible office space. If the UK economy is to continue to burgeon and flourish then a greater number of growing businesses will require the vital services of the BCA members.” Justin Urquhart-Stewart Co-founder of Seven Investment Management (7im)
The UK business centre market rivals the City of London in terms of employment numbers and commercial floorspace. Comprising around 80,000 businesses, which employ over 400,000 people and generate approximately £2 billion of income for UK Plc, the sector occupies almost 70 million square feet and maintains a rapid pace of growth as customer demand continues to increase. The sector has been at the forefront of enterprise and entrepreneurship for over 20 years, providing a home for, and creating communities in which business can flourish. The innate flexibility of the industry means it is uniquely placed to respond quickly and adapt to changing demand from small business and corporate occupiers. It is one of the most dynamic areas of the UK economy. It has also shown itself to be robust enough to withstand recession with 43% of those centres sampled in this report opening between 2005– 2009 and 21% opening between 2010–2013. The serviced office sector alone in the UK represents around one third of the global sector. A 2013 BCA survey revealed a conservative estimate of around 2,100 serviced, managed and light industrial business centres across the UK. It poses challenges for the traditional market which cannot compete with the flexibility and innovation offered by ‘fleet of foot’ business centres which can quickly adapt leases, facilities and even the sizes of units to suit the evolving needs of customers. The strength of the market lies in the ability of operators to manage properties and customers effectively, creating an environment which is based on flexibility,
Prev. page
Next page
of income for UK Plc is generated from the UK business centre market. It maintains a rapid pace of growth as customer demand continues to increase. IT IS MORE PROFESSIONAL. WE HAVE BEEN IN THE SAME CENTRE FOR 12 YEARS. WE HAVE EXTENDED THE SPACE WE OCCUPY A NUMBER OF TIMES AS OUR COMPANY HAS GROWN
community and simplicity. This drives demand, boosts supply and supports the exceptionally strong letting activity which is demonstrated by the sector. The digital economy has, at least in part, driven the growth of business centres creating a burgeoning SME sector and fuelling demand for flexibility and an office which can reflect the personality of the business occupying it rather than that of the landlord. It is of note that SMEs, which form the backbone of business centre occupiers, and particularly those of five employees or less, are responsible for 33% of new jobs in the economy. With around 80,000 SMEs based in UK business centres these companies represent a massive injection into the UK economy. What the research also shows is that, whilst SMEs are at the heart of the business centre sector, they are not the only occupiers. Large corporates increasingly take project and overflow space within business centres, taking advantage of the flexibility and simplicity rather than committing to long and potentially restrictive leases. Furthermore, far from being the choice simply for start-ups who will then move onto traditional leases, there are increasing numbers of companies for whom business centres are a long-term choice. Business centres are located in town and city centres, on high streets, near transport hubs; they encourage and nurture clusters and inter-trading2. In short, they are desirable locations in and of themselves. Critically, the short-term nature of the lease agreements in the business centre sector does not have an impact on either occupation levels or the length of stay of customers. In fact, it is
2
precisely because of the ability to leave a centre with such ease that attracts businesses to locate and remain within a centre. Central to the success of the sector and the flexibility which is so vital to customers, is the ability of business centres to manage and optimise the ‘churn’ of occupiers within individual centres and across portfolios. By operating at between 80% and 90% of theoretical capacity, business centres can accommodate customers short term needs for more or less space and in so doing, ensure that the dynamic nature of new and growing companies and entrepreneurs is supported. Looking to the future of the commercial market, it is clear that the business centre sector has an increasing role to play. The operators of such centres have a strong and successful business model, being able to adapt to market conditions more easily than traditional operators.
OF UTMOST IMPORTANCE IS THAT THE BUSINESS CENTRE IS LOCATED IN THE CENTRE OF TOWN AND NOT IN A BUSINESS PARK – WE WOULDN’T BE ABLE TO RECRUIT THE QUALITY OF EMPLOYEES WE DO IF WE WERE NOT IN THE CENTRE OF TOWN WITH THE ASSOCIATED AMENITIES
A 2011 survey of customers by Workspace Group highlighted that up to 20% of customer’s trade came from businesses within the same business centre.
UK Headquarters BCA Kinetic Business Centre Theobald Street Borehamwood Hertfordshire WD6 4PJ T +44 (0)20 8387 1444 F +44 (0)20 8387 1454 E [email protected]
bca.uk.com
Prev. page
Next page
// Executive Summary
The UK Business Centre Market
Executive summary
£2bn “The provision of flexible business space is a crucial pillar for any successful economy. To allow companies to flex their growth according to demand, need and cost is fundamental for most industries striving to develop. Over the past decade we have built a highly successful and valuable business not only for our shareholders but also for our Team and our clients, and I can say very honestly that we could not have achieved this without having access to variable and flexible office space. If the UK economy is to continue to burgeon and flourish then a greater number of growing businesses will require the vital services of the BCA members.” Justin Urquhart-Stewart Co-founder of Seven Investment Management (7im)
The UK business centre market rivals the City of London in terms of employment numbers and commercial floorspace. Comprising around 80,000 businesses, which employ over 400,000 people and generate approximately £2 billion of income for UK Plc, the sector occupies almost 70 million square feet and maintains a rapid pace of growth as customer demand continues to increase. The sector has been at the forefront of enterprise and entrepreneurship for over 20 years, providing a home for, and creating communities in which business can flourish. The innate flexibility of the industry means it is uniquely placed to respond quickly and adapt to changing demand from small business and corporate occupiers. It is one of the most dynamic areas of the UK economy. It has also shown itself to be robust enough to withstand recession with 43% of those centres sampled in this report opening between 2005– 2009 and 21% opening between 2010–2013. The serviced office sector alone in the UK represents around one third of the global sector. A 2013 BCA survey revealed a conservative estimate of around 2,100 serviced, managed and light industrial business centres across the UK. It poses challenges for the traditional market which cannot compete with the flexibility and innovation offered by ‘fleet of foot’ business centres which can quickly adapt leases, facilities and even the sizes of units to suit the evolving needs of customers. The strength of the market lies in the ability of operators to manage properties and customers effectively, creating an environment which is based on flexibility,
Prev. page
Next page
of income for UK Plc is generated from the UK business centre market. It maintains a rapid pace of growth as customer demand continues to increase. IT IS MORE PROFESSIONAL. WE HAVE BEEN IN THE SAME CENTRE FOR 12 YEARS. WE HAVE EXTENDED THE SPACE WE OCCUPY A NUMBER OF TIMES AS OUR COMPANY HAS GROWN
community and simplicity. This drives demand, boosts supply and supports the exceptionally strong letting activity which is demonstrated by the sector. The digital economy has, at least in part, driven the growth of business centres creating a burgeoning SME sector and fuelling demand for flexibility and an office which can reflect the personality of the business occupying it rather than that of the landlord. It is of note that SMEs, which form the backbone of business centre occupiers, and particularly those of five employees or less, are responsible for 33% of new jobs in the economy. With around 80,000 SMEs based in UK business centres these companies represent a massive injection into the UK economy. What the research also shows is that, whilst SMEs are at the heart of the business centre sector, they are not the only occupiers. Large corporates increasingly take project and overflow space within business centres, taking advantage of the flexibility and simplicity rather than committing to long and potentially restrictive leases. Furthermore, far from being the choice simply for start-ups who will then move onto traditional leases, there are increasing numbers of companies for whom business centres are a long-term choice. Business centres are located in town and city centres, on high streets, near transport hubs; they encourage and nurture clusters and inter-trading2. In short, they are desirable locations in and of themselves. Critically, the short-term nature of the lease agreements in the business centre sector does not have an impact on either occupation levels or the length of stay of customers. In fact, it is
2
precisely because of the ability to leave a centre with such ease that attracts businesses to locate and remain within a centre. Central to the success of the sector and the flexibility which is so vital to customers, is the ability of business centres to manage and optimise the ‘churn’ of occupiers within individual centres and across portfolios. By operating at between 80% and 90% of theoretical capacity, business centres can accommodate customers short term needs for more or less space and in so doing, ensure that the dynamic nature of new and growing companies and entrepreneurs is supported. Looking to the future of the commercial market, it is clear that the business centre sector has an increasing role to play. The operators of such centres have a strong and successful business model, being able to adapt to market conditions more easily than traditional operators.
OF UTMOST IMPORTANCE IS THAT THE BUSINESS CENTRE IS LOCATED IN THE CENTRE OF TOWN AND NOT IN A BUSINESS PARK – WE WOULDN’T BE ABLE TO RECRUIT THE QUALITY OF EMPLOYEES WE DO IF WE WERE NOT IN THE CENTRE OF TOWN WITH THE ASSOCIATED AMENITIES
A 2011 survey of customers by Workspace Group highlighted that up to 20% of customer’s trade came from businesses within the same business centre.
UK Headquarters BCA Kinetic Business Centre Theobald Street Borehamwood Hertfordshire WD6 4PJ T +44 (0)20 8387 1444 F +44 (0)20 8387 1454 E [email protected]
bca.uk.com
Prev. page
