CEO Steve Jude’s letter in Property Week – ‘SMEs spur on regional office recovery’30/01/2015
RE: SMEs spur on regional office recovery
I was pleased to see that the important contribution entrepreneurs and SMEs have made to the recovery of the UK office market has finally been noted (see: CBRE report w/c 19th Jan). From Edinburgh to Birmingham, Bristol to Manchester, SMEs drove strong growth in regional office markets, with 6.35m square feet of office space transacted in 2014.
Out of town markets in Greater London are also proving especially strong, particularly as occupiers are ousted from expensive Zone 1 sites, where conventional office space has become almost entirely unaffordable. Even in entrepreneurial hubs such as Tech City, suitable office space is proving unattainable for many small and medium sized businesses.
So why are so many landlords around the UK still allowing their office assets to sit partially or fully vacant, waiting to secure traditional long-term leases which are considered an inflexible fixed cost to the majority of these businesses? Why are major landlords not making more of an effort to attract the future of British business by becoming more flexible in their offering? And why are so many not recognising that the world of work has changed forever and not responding to this fundamental shift in the British economy?
Landlords have the great ability to tailor their under-utilised office space in order to accommodate the different requirements of start-ups and SMEs and allow the future of British business to maintain a presence in the burgeoning business hubs of the UK. By offering more flexible and shortened lease terms, they can fill long term voids and also generate a regular cash income from their assets.
It isn’t just traditional businesses that require such office space either. At Citibase we host and incubate a huge cross-section of SME’s. In Edinburgh for example, one of TripAdvisor’s top attractions ‘Escape’, a team building activity provider, is an occupier of our central Edinburgh business centre. The business has been so successful, and so well suited to the flexibility offered by the centre, that it has expanded with a second operation in one of our central Newcastle offices.
Innovative landlords can reap the rewards from our burgeoning entrepreneurial community, if they are willing to free themselves from the shackles that traditional long term leases can impose and embrace this brave new world of work.
Steve Jude, Chief Executive, Citibase