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July 18, 2012

Demand in Edinburgh accelerates in previous quarter

Filed under: News — Tags: , , , — Office Space @ 6:00 am

While news that Edinburgh’s office space market experienced accelerated demand last quarter would normally be greeted with joy, concerns have begun to arise that the current supply in the northern capital will soon be exhausted.

According to research conducted by commercial premises experts, Jones Lang LaSalle, the more than 244,000 sq ft taken up in Edinburgh during 2012’s second quarter is the fastest growth the capital has experienced since 2007. Not only was this last quarter’s take up was approximately 20 per cent more than Q1 2012’s figures, Jones Lang LaSalle added that 2012’s second quarter left last year’s 150,000 square foot take up positively in the dust.

A series of large scale office space rental deals in Edinburgh city centre drove take up figures, with the 80,000 square foot letting of Exchange Place to Blackrock and Quartermile One welcoming both Investec and Skyscanner as well. However, the result of such heightened demand could lead to a complete exhaustion of all of Edinburgh’s Grade A offices in 18 short months, as the number of construction projects currently in the pipeline cannot possible keep pace unless demand drops off.

The city has approximately 400,000 square feet of new office space available at the moment, according to Jones Lang LaSalle’s calculations. However, 25 per cent of that has already been spoken for or is currently being negotiated over.

Ben Reed, JLL’s director of office agency for Edinburgh, remarked that the commercial office space experts have been sounding the alarm for quite some time in regards to the impending shortage.

July 13, 2012

Surrey offices going vacant – local business leaders worry

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With large swathes of office space in Surrey going vacant, local business leaders have voiced their concern in an effort to find a way to revitalise the economy within the region.

The manager of a local shopping centre, Andy Nash, was interviewed by the local Mirror, stating that the economic climate has been feeding a ‘vicious circle,’ as cutbacks to local businesses mean more vacant commercial office space, which then leads to less cash coming back into the community through spending. The more this cycle continues, the less attractive it becomes to live in such an area, and Mr Nash fears that unless something is done soon to stem the tide, the region may begin to slide into obscurity.

Local commercial premises experts agree with the shopping centre manager’s assessment, remarking that when office space rental figures plummet, the economic impact to Surrey could be quite serious. The lack of modern offices in town centres was cited as a major reason for businesses to relocate, as the needs of the modern company have evolved away from the more pastoral second-storey office above the corner shop and towards air conditioned, open plan team offices with lift access for disable clients and updated amenities.

Landlords have been trying to make these older-style offices as attractive as possible by slashing rental prices, but this has had little effect on the mass exodus to more modern offices in larger city centres. Instead, experts say that the next step may very well be to refurbish these offices for residential use in an attempt to attract younger Brits to live in town centre flats instead.

July 11, 2012

Offices are more than just a place to work, experts say

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Commercial premises play a role in establishing the culture of your business as well as simply providing a place to get work done, experts say.

Experts in the office space sector were recently asked by the Manchester Evening News to chime in on their opinions about the kinds of challenges businesses face when relocating from one office to another under the current market conditions, with the consensus being that offices aren’t just places to go in order to get work done. Instead, a company’s office environment is a place that acts as an integral piece of the support structure of the business.

There’s simply more than just keeping the rain out when it comes to office space, experts commented. You need to provide an environment to your staff in order to allow them to function properly and efficiently in their roles, and the right office environment goes a long way towards achieving that goal; businesses are now keeping these needs in mind as much as they are keeping a close eye on the costs of an office space rental.

Office relocation is now as much about finding commercial office space that will provide a cost-effective place to conduct business as it is about finding a place that will support the cultural identity of a given company, experts added. The least expensive option isn’t always the best one, even though economic pressures place an inordinate amount of weight on that particular factor, but business owners and office managers are rapidly learning that an office accommodation that ticks all the boxes – and not just one – lead to business growth.

July 4, 2012

Edinburgh Grade A office supply dangerously low?

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One new report from commercial premises specialists GVA has revealed that it could be as little as 18 months before the Grade A office accommodation in Edinburgh is exhausted.

Demand in the Scottish capital’s city centre seems to be following in the footsteps of London’s market, as it will soon outstrip the remaining supply of office space, GVA said, adding that a large part of the problem is both a lack of confidence in the private sector and severely restricted finance options for new construction in Edinburgh. There is an ‘urgent’ need for grade A office development in the city, argued the commercial office space specialists in their report, especially in light of the highly energetic nature of the grade A office market over the last year in Edinburgh.

Stock is continuing to diminish – and rapidly – GVA warned, and with no evidence existing that demand will recede any time soon, the property consultants fear that the well will soon run dry in regards for appropriate grade A space.

AGV Scotland’s national markets director, Toby Whithall, commented on the new report, remarking that many make the common mistake in thinking that the banking crisis and resultant economic downturn led to financial service companies abandoning the city in droves as their costs ballooned, the truth of the matter is that the lion’s share of the banking sector doing business in Edinburgh remained exactly where they were, which means that there is very little high-quality space in the city that has remained unoccupied. Moreover, new construction remains very scarce, with only two sites in the pipeline to be completed in the immediate future, which could lead to upward pressure being exerted on office space rental prices in Edinburgh as supply dwindles while demand continues to rise.

June 27, 2012

Have a vacant office? Convert it to a gym, expert says

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If you’ve got commercial office space that’s sitting vacant and not earning you any money due to the poor economic conditions in the commercial premises market, one expert says you should consider converting the space into a gym instead.

Iain Mercer, office development tycoon and son of the late Wallace Mercer, chairman of the Hearts football club, says that unused office space in three of his Lothian-based office blocks have been converted into fitness centres. In fact, Mr Mercer has successfully transformed his office block in Dalkeith back to fully let after Pulse Pilates & Fitness Studio has replaced Welcome Finance, a former tenant that recently relocated, and two other lettings preceded this one, with the contracts seeing Mr Mercer’s Musselburgh-based Harbour Point offices and his Edinburgh-based WH1 development welcoming ‘mini-gyms’ operated by Curves.

The entrepreneur was cleared to bring in Pulse after applying for a change of use from Midlothian Council for the Soutra Point development, an approval granted to him partly because the fitness studio is the first of its kind within in the area. Mr Mercer said he would much rather see the space producing income and occupied than seeing it simply lie vacant and contributing nothing to his portfolio; he additionally said that the situation also benefits the council, as Pulse will be paying business rates to the local authority.

When asked about whether it was a desperate measure to allow fitness operators take up vacant office space, the young entrepreneur said that the economic situation in the UK is such that landlords need to read the writing on the wall. However, the lease agreement between Pulse and the office block is quite acceptable, Mr Mercer insisted.

June 22, 2012

Serviced offices proving popular in North East region

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The North East of England has seen a substantial increase in the number of firms taking up serviced offices, it was recently revealed.

New research conducted by a leading commercial premises expert found that firms have been abandoning their traditional office accommodation in droves in order to take out serviced office space instead, with the serviced offices sector reporting a 35 per cent increase in popularity for the first six months of 2012.

Perennially popular because they provide occupiers with a solution for ‘immediate occupation,’ serviced offices consist of business centres managed by a firm that provides  integral services such as telephone answering and reception, while offering the flexibility of taking out exactly the amount of space needed by a firm – whether that be one single desk or an entire floor of the business centre.

Not only are serviced offices growing more popular, the research found that businesses are taking up more space than they did last year. Each business took up 18 per cent more space than they did over the same period of time in 2011 on average.

The only facet of the serviced office sector in the North East that didn’t exhibit any growth was average cost. 2011 figure saw average costs of £168 a month, while this year saw this price only increasing by a single pound to £169 – a negligible increase indeed. However, if demand levels increase to the point where serviced office supply begins to grow scarce, industry experts predict a rapid increase in the cost of securing serviced office space.

June 15, 2012

Local authority poised to reorganise its commercial premises

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Calderdale Council is poised to undertake reorganisation efforts in order to sell off its excess and no longer fit for purpose office space, it was recently reported.

Any and all council-owned commercial premises in Halifax are currently being examined in order to determine which of them will be modernised and refurbished and which will be sold off. The budget for the modernisation scheme stands at around £12 million and is designed to make it possible to enable around 1,000 public sector workers who currently have positions in Halfiax town centre, and will make it £7.5 million less expensive to maintain the buildings over the next quarter century – with an additional £1.2 million in savings every year thereafter.

The new office accommodation proposals will be voted on early next week by Calderdale Council Cabinet. If approved, the council will, over time, vacate its offices at the Elsie Whiteley Centre, Park Road, the Hoover Building, Horton House, Dean Clough, and Northgate House in order to complete the renovations and dispose of any unwanted buildings in office space sales.

Tim Swift, Calderdale Council leader, remarked that the new plans are representative of a perfect solution for Halifax, as they will benefit the local economy and local businesses by keeping jobs within Halifax town centre. Janet Battye, the council’s deputy leader, agreed, remarking that the local authority wishes to keep its office buildings within the area, as it will make it easier for local residents to get in contact with the council if needed.

June 13, 2012

Manchester rental prices predicted to outpace inflation

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Manchester office space rental prices are expected to outpace the inflation rate, commercial premises experts have predicted, as the city grows to become a more costly place to conduct business.

According to Savills, office rents in Manchester city centre have already gone up more than double the inflation rate over the past 12 months, with even more growth to be expected over the coming months. The estate agent’s latest market report for Manchester found that headline rents are being pushed up by a dwindling office accommodation supply.

While Manchester’s vacancy rate has gone down to 11.7 per cent – which equates to eight out of every nine square feet of city centre space taken up – the remaining accommodation is of lesser quality.  Less than 750,000 square feet of grade A office space remains available within the city,  and with demand levels spiking without any significant new construction in the development pipeline, Savills remarked that the balance of power is set to shift back towards landlords and away from tenants.

The property expert’s report fund that headline rents are now £30 a square foot in Manchester, which is 7.1 per cent higher than 2011’s top rental price. Savills Manchester head, Patrick Joynson, remarked that the remainder of office stock still available could quite easily be gobbled up by any number of substantial corporate requirements that are circling like a pack of hungry sharks, which could place even more upward pressure on rental prices.

Mr Joynson indicated that Savills expects these trends to persist over the coming two years, though pre-letting activity will most likely go on being more competitive.

June 10, 2012

Think ahead when it comes to choosing office accommodation

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When it comes to choosing office accommodation for your business, you’d best think ahead in order to avoid any unpleasant situations down the road, experts warn.

For many firms, it’s all too easy for the issue of commercial premises to slip through the cracks. However, it’s crucial that businesses review their lease events and office space requirements on a regular basis.

Experts say that the best way to accomplish this is to keep in mind what your needs for the future will be in relation to your office space requirements. Keep this in mind as you go about your day-to-day business, as it can all too easily be lost in the shuffle of the daily grind.

Some businesses tend to go through offices much more swiftly than others, but chances are even a sole proprietorship may need to go on the hunt for office space at least once or twice over the years. While it may seem daunting to have to face building, buying, or even leasing an office, there are things you can do to prepare that will make it less stressful, such as keeping in mind the entirety of your occupational costs – it’s no good if you get a nice low headline rate if there’s no nearby car parking for employees, after all.

Another thing you’ll need to keep in mind is whether or not you’ve got an option to break your lease. This has grown to be common practice with many larger firms, and these tenants have the opportunity to break their lease if certain criteria are fulfilled during a certain period of time, giving occupiers the flexibility to relocate in the event of it becoming necessary.

June 8, 2012

Central London demand at highest level since 2009

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Central London’s office space market has picked up recently, with demand rising to the highest its been since 2009 as a result of interest finally catching up with the diminished supply of city office space, Jones Lang LaSalle recently found.

The commercial premises consultancy found that total demand figures stand at 12.6 million square feet currently after potential tenant demand increased by more than 12 per cent over the last year. JLL City agency head, Dan Burn, remarked that central London is shaking off its torpor as signs of life begin to creep back in – an innervation he attributed to the technology, media, and telecoms sector expanding.

While things are indeed looking up, it’s not all coming up roses. Demand was still under the 10-year average by five per cent, JLL warned, leading many to believe that the eurozone crisis and ongoing economic uncertainty have left firms reticent to relocate to new office accommodation, which means that leasing volumes are remaining modestly low.

It’s true that JLL expects that new office take up will be stagnant in the shorter term, the property consultancy did say that it found some evidence that select firms were regaining their lost confidence and have started to actively seek new opportunities. Mr Burn said that JLL has begun to see indications that 2012’s second half could have more activity in store for it than the first six months of the year, as quite a few quiet discussions have begun to take place on both existing office developments and those slated for completion in the immediate future.

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