What’s trending now? Multi occupancy property in the East
PUBLISHED: 17:21 20 December 2017
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John Balch, Nwes strategic director, on new demands for quality workspace with flexible access.
Nwes operates 25 business, enterprise, and innovation centres across the East of England, London and East Midlands. Over the last year, we have enjoyed an increasing demand for quality office space as SMEs experience a lack of supply from traditional landlords.
There are many reasons for this change in the balance of demand and supply. However, research suggests the prime cause is a higher demand for residential space which is being facilitated through a less onerous change of use regime to convert commercial properties and the development of the likes of student accommodation.
As an example, we estimate that Norwich alone has seen a reduction in commercial space available in the region of 500,000sq ft. Reduced availability puts pressure on rentals and makes it especially difficult for new businesses to find space within which to grow.
In wider terms, the numbers of commercial property transactions are reducing and, according to figures from Savills, these are down 6pc on the long-term average. The same research states that yields are also down and are at their lowest levels since May 2016.
These changes have helped to fuel a huge rise in the popularity of “co-working” and “pro-working”. Small companies, start-ups and independent professionals are keen for flexibility and require a space that meets their needs. Long gone are the days when an office was just seen as a space to operate from. It now forms part of the company identity and businesses want to be comfortable hosting clients at their premises.
Nwes has always been a supporter of business communities and this is now seen as one of the lynchpins of a successful co-working space – the ability to network and interact with like-minded individuals is key, and regular networking events are becoming increasingly popular.
Businesses and entrepreneurs want a space that can grow and evolve with them. For example, we regularly see people join one of our centres as either a virtual tenant or “drop-in” member, before graduating to a permanent desk space and eventually dedicated offices.
The flexibility of both the space and contractual terms has been key to enabling this to happen and we expect this trend to continue through temporary arrangements and flexible licensing. Wrap-around services such as shared ICT systems, access through smart phones and online billing allow users to move in effortlessly and quickly and have their unique requirements follow them around a building – there is nothing more frustrating than having to wait for wet signatures, phone or internet installation!
Nwes has also seen an increase in the requirement for added value services – such as business support and access to funding. Tenants are looking for “more than just a box” and, especially in the case on newer businesses, are making judgements on the property they occupy based on the value to them as opposed to the base cost. Fully serviced office spaces and co-working communities are increasing in popularity as they provide tenants and users with the tools they need to succeed. We receive regular feedback that the provision of onsite advice, support with obtaining finance, or simply the right introduction, has helped a business to grow and prosper.
On the back of the need for added value and wrap-around services we have seen the evolution of co-working to co-working 2.0, or what is now being commonly referred to as “SpaaS” pronounced Space, or “WaaS”, to describe workspace as a service.
The new breed of client is demanding the ability to quickly find quality workspace with flexible access and simple terms. Modern day businesses look for zero upfront cost and the option to pay as they go.
These changes have been further fuelled by the digital revolution where communication is instant and connectivity and flexibility paramount. This has driven a change in use and the growing demand for flexibility has led to innovations in building design and layout. As already stated, we are seeing a huge rise in popularity in these types of spaces, with the trend starting in London, and we expect to see them being a mainstay of commercial space in the future.
This past year has seen reducing options for providing well located traditional commercial offices. However, the demand for higher quality space and more flexible terms should drive innovation in the provision of multi occupancy premises.