Are business centres, with their flexible space arrangements, likely to be at an advantage during these difficult economic times or will most office occupiers continue to stick with tried and tested conventional leasehold arrangements?
Some clues as to how the serviced office sector in Scotland has been performing recently has come from the final quarterly figures of the 2010 edition of the Serviced Office Review, which is compiled by the specialist web-based dealer, officebrokers.com. This company is itself an example of the relative ‘youth’ of the sector, having been launched ten years ago by co-owners Jim Venables and Andy Haywood, whose professional background was not property but recruitment.
The Review reports a generally good end to the year for operators north of the Border, with the number of tenants taking new serviced office space in the last quarter of 2010 being 7 per cent higher than the same period in 2009, although this was made possible only by a 29 pc jump in October (the November and December figures both being negative in comparison to 2009). Over the year as a whole new take-up was within 1 pc of the figure for 2009.
New lettings in January were considerably up on the same month in 2009 but then these slumped dramatically in March before a recovery took place after which the 2010 and 2009 figures ‘evened out’ until the autumn.
Scotland was the only region (sic) to record an increase in new lettings in the final quarter of 2010, the UK average figure showing a drop of 26pc compared with 2009. For most of the year inquiry levels were much higher in 2010 than in 2009 – in some months considerably so – with July being the only exception.
The average workspace per tenant stood at 3.6, compared with 4.2 for the same quarter in 2009 but the average cost of each workstation was £254 per annum as against £221. The cost per workstation appeared to greatly fluctuate, ranging from £447 in February to £155 in May; after February the highest priced months were November and July. The average cost of a workstation in Scotland during the last three months of last year was greater than anywhere else in the UK outside the Central London and Greater London regions.
During the final quarter the lease length signed by new tenants averaged 8.3 months, which was also the average for the entire year and for 2009 as well, although the former showed more peaks and troughs.
Julie Grieve, the Edinburgh-based chair of the Business Centre Association, umbrella body for the UK serviced office industry, commented: “These figure would tend to confirm our view that Scotland started to come out of the recession after London and that these are an early indication of a recovery.
It has often been said that private sector growth will be necessary, particularly in Scotland, to take up the slack caused by public sector job cuts and if so serviced offices will have an important role to play.”
With new business start ups and many small firms already trading expected to increase their turnover, Grieve hoped that property development companies would consider major provincial locations like Perth, Livingston and Ayr for more serviced office growth, given that until now the sector within Scotland has tended to be dominated by Edinburgh, Glasgow and Aberdeen. She added: “The major provincial towns are quite well supplied with managed workspace which has complementary office space attachment but I believe there is likely to be a growing requirement for fully serviced business centres.”