Digital innovation and investment spurs office revolution16/05/2014
Owners of secondary UK offices should take advantage of the growing interest and investment in digital entrepreneurism by offering under-utilised office space to start ups and SMEs looking for a more flexible and affordable business base.
The Government has been a cheerleader in supporting the creation of digital hub in East London. Its launchpad programme, designed to ‘support digital entrepreneurship by lowering barriers to success,’ will grant £1 million to support early and growth stage SMEs to develop innovative projects, improve growth capabilities and attract investment. Whilst there will be spin-offs for the rest of the UK, this support has been to date mostly London centric.
In principle, the programme’s objective is a good one. It aims to bring to life the start-up technology companies who need guidance, advice and opportunity. Yet expensive and restrictive office rents remain a huge barrier for the thousands of aspiring entrepreneurs across the country who are looking for an opportunity to establish and grow their business in a location that offers greater flexibility and affordability.
A London-centric technology district isn’t really the answer for the vast majority of the nation’s entrepreneurs or office landlords. The area around ‘Silicon Roundabout’ in Shoreditch may well be perfect for larger, more established tech companies that can afford the prime rents chargeable in London (note the recent letting to Tesco’s digital arm), but it is clearly not ideal for a smaller SME starting out in the world of competitive business, especially those not wishing to be based in London.
These start-ups are cost-conscious and risk adverse in their infancy (particularly as a result of recent economic turmoil) and have been flocking to non-London locations for decades. Cambridge has been a prime example, flourishing with investment into scientific and technological business. But it too, bar one or two locations, is becoming too expensive an option for SMEs as the big tech corporations move in.
Predicting future incomes is almost impossible for small businesses. Globalisation and technology have combined to shorten product lifecycles. Cautious entrepreneurs shy away from long-term leases in expensive locations in order to protect their cash. They understand that agility is the key to success. A business may grow significantly in early years – or it may not – and therefore will require a workspace that is sympathetic to its needs. These entrepreneurs demand flexible office accommodation where future liabilities and incomes can be matched.
At Citibase, we are specialists in matching entrepreneurial occupiers with owners of second hand offices nationwide. The far sighted landlords with whom we are working have readjusted their traditional view of managing an office asset and have understood that our disruptive business model bridges the gap between the needs of entrepreneurs and landlords.
We can manage a secondary office location and importantly, attract this key entrepreneurial occupier market through more flexible terms, while the landlord sits back and enjoys a newly generated cash income. We can do this for landlords, because unlike traditional agents, our unique business model allows us to fish where the fish are.
The world of work has changed forever which means the office occupier model has changed forever too. It is crucial for owners of vacant second hand office space to take advantage of the opportunity to support the growing number of UK startups and SMEs, particularly in the flourishing technology sector, in order to foster a new generation of business talent and importantly, secure a regular income from their investment.
Steve Jude is CEO of Citibase, whose disruptive business model generates cash for landlords from second hand office buildings.