Serviced offices provide business flexibility

Copyright: David Lawson - Property Week Feb 2001

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Running a communication link 120 miles from London to Birmingham is no mean task even in an age of  mechanised construction. Imagine threading the same length of cable through the walls and ceilings of a modest office building, let alone part of a single floor. Perhaps more important than the physical problem is why anything less than the NASA Space Centre would need such a mind-boggling network of copper and fibre.   Is says something about the kind of demands tenants could make in future. And the fact that this is a serviced office on an ultra-short lease adds even more about what landlords will need to offer.

  PricewaterhouseCoopers wanted a demonstration and training centre for the kinds of technology  firms need to compete in the e-business revolution. This includes the electronics and software needed for providing services via a variety of methods including call centres and internet service providers via fixed line,  wireless and cable.   ‘In the past we would go to clients’ sites to help develop the software,’ says Keith Finnett, a principal consultant with PwC who has overseen the creation of  the New World Solutions Centre. Demand for faster development switched the focus to a centralised operation where clients would come in for intensive demonstrations and training.

 That required enough space to sit 100 people in front of computers, a reception area to ease clients into this cyber-classroom and relaxation areas where they could cogitate over the implications of  what came off the screens. The building would require super-fast Internet connections, of course, as many of the lessons would involve online business transformations.

   It would be a struggle to find a conventional office to meet such demands  but this tenant  wanted even more. ‘We don’t budget for more than a year or two ahead,’ says Finnett. ‘The technology we work with changes every six months.’

   A serviced office seemed the logical choice but while these are often at the bleeding edge of new technology, it still meant finding something with specifications well off the chart. Mark Lewis realised he was in with a shout. The head of UK sales and marketing for Abbey Business Centres had spent every waking moment since the firm was launched 18 months ago telling the world about the joys of CAT 5 cabling and Internet links in Abbey’s 10 UK centres.

   Sometimes even this is not enough, however. Logica had been reeled in by the technology at Slough but needed more, adding a communications centre, meeting rooms and kitchen.  PwC was impressed, particularly when Abbey had space at Heathrow. ‘We needed a location with access to our staff in London but convenient for clients coming in from Europe, the Middle East and Africa,’ says Finnett.

   But he still needed even more, leaving Abbey with a tough decision.  PwC wanted existing cabling boosted to provide more capacity but it was committing to only a year’s occupation. ‘And we would not normally pay for something we felt we could not use when a tenant moves out,’ says Lewis.

   In the end, PwC did the job itself. ‘You have to compare this kind of spending with a market we are targeting which is worth an estimated $200bn worldwide,’ says Finnett. Last year alone the consultants helped clients make $1bn of investment, in many cases based on what they had seen in the 10,700 sq ft centre.

  The fact that Abbey raised no objections was crucial. ‘A key factor for us is the flexibility. We need to be able to change quickly . That is not always possible in serviced offices.’  

  Abbey achieved no premium on normal rents, which are understood to be around £140 a sq ft but will be content, as tenants tend to renew agreements. PwC could be around for several years and is drawing a stream of blue-chip names through the doors, any one of which could be a potential future tenants here or on the chain of centres being planned across Europe.

  So will the developer ensure these are fitted to similarly high standards. It is unlikely to go that far. ‘It would be wasted if we took in something like a recruitment firm which just needed a few desks,’ says Lewis.

 But there appears to be a trend towards consulting with potential tenants before creating new space. ‘One we are talking to has gone into extreme detail about what it requires,’ he says.

  This seems to go against the whole concept of serviced offices, which have blossomed into a new sector on the basis of providing a universal standard of ‘plug-and-play’ space so any tenants can walk in and start business immediately. This will present a new challenge to developers: tailor space to meet needs or lose the chance of netting a growing band of high-tech tenants.

 That may not be as traumatic as it sounds. Abbey won PwC with an open-plan floor rather than ready-to-use suites of desks. The crucial factors were a standard of services including  high-speed telecoms links [which have cost Abbey £3m to install across its network of centres] and a willingness to be flexible.

 ‘Companies are not looking for space. They are not even looking for serviced space. They are looking for business solutions that suit them,’ says Lewis.