Serviced offices on cutting edge of new technology

Copyright: David Lawson– Property Week May 2000

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Not many years ago serviced offices were the antithesis of power and efficiency. You were lucky to get a working typewriter and  phone, let alone access to  anything electronic. Today, they are at the cutting-edge of new technology. companies arrive bristling with cash and ideas,  demanding an immediate door into cyberspace. Blue chip giants taking short-term space to handle a big new contract expect  at least as good as they get at head office. Bankers who rarely see their HQ want a cubbyhole to plug in a laptop.

  For an insight into the way everyone could work one day, it is worth checking out the sophistication of electronic services in a Regus building, the fact that HQ is part of an e-commerce company, the ease that a major Internet player could slot into an Abbey business centre, and even the so-called 'soul' a small operator like Nexus is conjuring among the City's panelled premises.

  Microsoft coined the term 'plug and play' to demonstrate how  computers and software can be crafted to perform new tasks effortlessly.  Serviced offices applied the same principle to bricks and mortar. Now the two are becoming almost indistinguishable.


Strolling into No.1 Cornhill is like stepping back in time. Wood panels, marble pillars, and people conversing quietly from armchairs under an elaborate dome gives the air of a 19th century gentleman's club. Yet the elegant veneer masks technology that would  sink  a regiment of  dot.coms.

 In fact, many of the visitors run dot.coms. Some have computer-packed offices upstairs; others are bankers, casually talking telephone-number investments to eager clients. Yet more have dropped in to plug laptops into 'touchdown' points carefully merged into the decor.

 Richard Pinnick is more than happy with the impression of a club. As a technology whizz, he was handling sophisticated software before most people had heard of the Internet. But in his role as  finance director of Nexus, a fledgling serviced office operator, he sees a danger in failing to realise it is just a tool.

 'The important thing is to make it work the way each customer needs,' he says. Little things like making sure the telephones in each centre are identical, so you don't have to work out which buttons to press, are crucial.

 So is an apt level of technology. Some occupiers will demand the full panoply of sophisticated services but others would be overwhelmed. 'It is all about  creating the right  solutions and putting them in the right environment,' he says.

 No 1 Cornhill shows that doing business has not really changed since deals were carried out in nearby coffee shops that evolved into Lloyd's and the Stock Exchange. Some may be happy to drop in and  plug into cyberspace but many want to meet real people in real space.

  Nexus boasts it is the first supplier to win a drinks licence for a serviced office, adding further to the aura of a gentleman's club. But forget any hint of 19th century sexism: after imbibing, members repair to   Ally McBeal-style  unisex toilets,  created to further enhance the atmosphere of a cool, hip operation.

 This merger of old and new is reflected in the owner. Nexus, which is backed by property company Benchmark, merged the technical talents of Pinnick with the track record of Vincent Wang, who spent decades conjuring futuristic schemes at Greycoat and Stanhope with Stuart Lipton.

  Serviced centres  demand the highest level of technology but also need 'soul', says  Wang. 'People should ask whether they will enjoy working there, be happy to show it off and what else they can do besides work.'


 Regus was as much a pioneer of new technology as of serviced offices. Long before the market became crowded it was renting out international video-conferencing and offering 'total desktop solutions' in some of its earliest centres.

 It is no surprise that occupiers relish the idea of wrapping technology in a single easy-payment charge, says  head of IT management Travis Benton. 'A lot of start-ups  have no equipment so they avoid hefty initial costs. Just setting up a high-speed internet system could come to 50,000 pounds before buying the hardware.'

  The company is now looking past simple provision of equipment and networking links between its 300 centres, however. Maintaining  these systems is the kind of cost - and distraction  - many occupiers can do without when running hard to keep up with their own hot markets. Research group Gartmore has estimated it costs between 6,000 and 16,000 dollars a year to run a desktop PC.

   Regus is looking at the possibilities of becoming an application service provider (ASP), which removes even more of a burden from tenants. This involves renting out not just the equipment but the application software and storage space on central computers. ASPs are  expected to be the next growth market, generating business worth billions in Europe alone over the next five years.

 'Another advantage is that where information is kept centrally, users can literally plug in at any of our centres,' says chief information officer Duncan Scott.

  This is seen as part of a battery of incentives to keep inherently short-term customers coming back when their tenures end. Mobile phones are another kind of technology which falls into this area. Regus negotiates hefty discounts which continue after leases have run out.

 Benton sees them as 'sticky' services which keep the firm in client's minds and promote  repeat business.


When the Consumers' Association announced it would sell cars online as part of an 'anti-ripoff' campaign, it almost guaranteed a switchboard-jamming deluge of  calls. But rather than betting on a super-powered call centre, it has slotted into a business centre in Slough.

 The fact that Abbey, one of the tiddlers in this market, could handle  a million Internet hits a day within two weeks of being started indicates how significant communications technology has become.

 'We have invested 3m pounds fitting out our centres with the most advanced technology and internet links capable of catering for the highest imaginable demand,' says managing director Geoffrey Howison.

 Structured cabling,  communications rooms and networking between centres hundreds of miles apart are becoming standard, with frame relay connections and power backups that would have once been seen in only leading-edge technology companies. 'I have just been talking to a customer who wants fibre-optic connection speeds that go way beyond anything seen before,' he says.

  Abbey is part of international group IIR, so it has the deep pockets to fund such ambition as it expands into mainland Europe and the US. Other newcomers may not be as lucky, and struggle to keep up.


 The anticipated merger of the Internet with bricks and mortar has already happened. The one billion dollar merger of HQ Business Centres with e-commerce company Vantas last year produced the kind of  organisation many see as the future of property.  'They are the clicks and we are the bricks,' says Ron Adam, operation and projects director.

  This merging of space and cyberspace will lead to even greater emphasis on technology. HQ has already networked its European centres and aims to extend this across the Atlantic as the portfolios of more than 500 centres are merged.

 'A year ago the provision of a comprehensive technology service was considered something of a novelty. Now it is essential,' says IT director Charlie Helps.

 That means extra outlay. Fitting out a serviced office centre costs around 200,000 pounds, says Adam. But that is just for services like telecoms. Putting in data links and other advanced IT  can mean  another 100,000 pounds.

 The full cost is unlikely to be recovered but HQ sees itself as a premium service for blue-chip clients who will demand this sort of service.

 'It is now an essential cost of doing business, but it is worth it if it attracts five-star business,' says Helps.'

 Other services are also being added such as 'club lounges' for customers that need a touchdown point rather than their own offices.  Tenants often have their own climate-controlled computer rooms but can be offered  computer server hosting where they wish  to hand over control of hardware or web page administration.

 'There are basically two kinds of tenant: those with their own IT who just want flexible space and a vast other group who want everything,' says Helps.

 It is this second group - the 'swift and young' - that could transform serviced offices into a dominant part of the property market in the next decade.