Strategy & Operations » Real estate » New thinking on office space

While the uncertain impact of volatile market conditions, and of course Brexit, remain to be seen, businesses of all sizes are having to adapt to become more flexible than ever before. Even the most well-established businesses with enough capital to sustain sudden expenses, are reviewing what were previously assured and predictable growth plans.

A business’s property profile is one of the most costly financial investments to be made and, over the years, the associated fixed rental rates are amongst the standard steps taken in establishing a solid presence for your business.

That cost certainty however, comes at a price of the flexibility that is now critical in the modern and reactionary market place.

New businesses are growing at an entirely unpredictable rate while some large established businesses are seeking the autonomy to customize a workspace to better respond to supply and demand. However, with office space at a premium, both large and SME businesses are finding it harder to find a premises that can fill their present and future without breaking the bank.

The possibility that you might need to expand, reduce, reallocate or relocate your workforce at the speed required, particularly for example in the contact centre or technology environment, is extremely impractical under the traditional office lease.

The rapid growth of the tech sector is a prime example of why the traditional office lease is quickly becoming an outdated economic model for start-up businesses.

Last year alone, the tech sector’s take-up of office space was up 65 per cent on the 10-year average. This sector has very specific needs from a building, such as super-fast internet speed, 24-hour accessibility and fast onsite support, which would be extremely costly under the traditional office lease.

In just the last few years, start-up tech firms with smaller operations are already growing out of their initial space and requiring larger spaces if they are to achieve sustainable growth and support their expanding staff. In the tech sector, momentum is key to meeting fast-changing demand and forking out large investments in bricks and mortar is simply no longer conducive.

Innovative approaches

Whether a business is expanding or simply relocating due to success or commercial needs, budgets can no longer be front-loaded into capital expenditure laden construction or leasing of properties.

When considering the growing need to balance financial flexibility with cost certainty in the UK, it’s also interesting to note that our leasing habits differ vastly from the norm abroad. For example, while companies here have traditionally committed to the surety of long 10, 15 or even 20 year leases, the average is closer to three years in the US or India.

While these short-term lets would be at odds with the business growth plans of most UK businesses, more and more highly successful businesses of all sizes are increasingly exploring more flexible yet capex-free models.

In addition to the unpredictable business growth patterns and needs for agile solutions, the long-term demand for flexible workspace is being further driven by global trends towards innovation and retaining talent in the workforce. By 2020, millennials will form 50% of the total workforce. This generation is not predominantly motivated by the financial rewards of working. Instead, quality of life and flexible working/careers are the key elements which will drive the future demand for office space.

Ensuring office spaces work for both millennials and older generations has become much more difficult. Research suggests that the older generations plan to work well into their 60s and beyond, which suggests that we’ll see an increasing number of workers of all ages using managed offices.

The likes of managed office solutions (MOS) financial packages, which combine property acquisition, workspace design, fit out, facilities management and supporting services, reflect the emphasis now being placed on financial flexibility, retaining talent and the more expansive use of fluid operating costs (opex).

With simple, streamlined systems and structured terms, business owners can invest their time, effort and money into their businesses, not bricks and mortar.

Simply put, the new wave of shared offices options are allowing start-ups and multinational businesses alike to not only access all the amenities they need at a cost-certain price, but to work within a flexible financial model that fosters their own unique growth and culture.

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