Copyright: David Lawson
Published: Property Week Oct 2007
Scientists have just cracked a centuries old investigation into how bundles of embryonic cells can be classified as fish, fowl or human. Perhaps they could now extend their expertise to the endless debate over whether managed space is property or a business service. The answer will be crucial over the next year or two. As bricks and mortar crumble in the eyes of investors, it will be illuminating to see whether the rot infects a broad swathe stretching from glossy West End offices to modest workshops on industrial estates.
The property sector is suffering from falling share prices, rising interest rates and crunching credit but managed space operators are sticking to ambitious expansion targets, strengthening the argument that this is a service industry. The last time things went wrong it happened very quickly, says Rob Hamilton, MD of agent Instant Offices. This potential crisis has yet to affect occupancy levels. Almost every business centre opened in the last six months has been filled.
All the big names are busy expanding. Regus is approaching the magic 1,000-centre mark but still looking for ‘measured growth’ through acquisitions and new centres. Bulk is not the only target, as it tweaks the offer with new ‘drop in’ centres. MWB Business exchange is concentrating on London, with 11 centres opened since its market float and a continuing push into management agreements. MD John Spencer sees realignment to smaller tenants as protection against any dip in the economy.
MLS continues the frenetic race to match Regus in scale. Sales director Ian Kibby says turnover leases will provide a buffer to any dip in the economy and is looking abroad for new prospects after opening in China and India. South America is next on his list. Executive Offices is also expecting to do well overseas. A Paris office has just opened as part of a strategy to service all major European capitals. David Alberto is another spending much time abroad as he spices Avanta’s UK expansion with a dip into the US.
Foreign markets are part of Forsyth’s £200m expansion programme under new chairwoman Jane Gwillim-David, but she also wants another 20 centres across the South. Evans Easyspace, another operator confident in the strength of small tenants, has not eased up on plans to open a new centre every month, while Michael Kingshott’s Serviced Office Group has struck a £50m deal with UBS to stay in the race for growth. Grosvenor believes there is still unsatisfied demand in the West End, and is adding business centres to its estate. The City Corporation feels the same. Its 100,000 sq ft Bank of America building in Allies Street is almost full, so it has bought Canalside Works from Shoreditch Trust to create more flexible space small firms. Another scheme is on the cards in Worship Street.
A small serviced office firm has scored a breakthrough by winning one of the most prestigious awards in the property industry. The pioneering role of managed business space in new working methods has long been overlooked by a mainstream sector which often trumpets advances already standard practice in short-let space. This could change with the choice of eOffice for one of this year’s British Council for Offices major awards. The Manchester centre was considered initially as a small development project but quickly pushed aside leading names to scoop the top prize for innovation.
A key factor is the technology providing a ‘plug-and-work’ space for mobile staff and start-ups on desks rented by the hour, day or permanently. But equally important was the fact that the centre is predominantly open-plan. This allows for the networking often lacking in warrens of small offices. The centre feels like an office club, with vibrant colours and high quality fittings equivalent to a top hotel. It is a ‘mini business district under one roof’ according to eOffice, which also has centres in London, Birmingham and Bristol. This points the way to how all office work may evolve, says the BCO, ‘and will certainly give more established business centre operators something to think about’.