Large property agents are missing out on millions of pounds in fees due to their lack of activity in the serviced offices sector, a major industry summit declared yesterday.
Demand for serviced offices has grown during the downturn as ever increasing numbers of businesses seek more flexible space with added value, whether that is serviced offices or managed industrial space.
Yet the rapid growth is still being fuelled by specialist brokers while larger property agents appear unaware of the benefits serviced space can offer both their clients - and themselves as agents in terms of fees.
Jennifer Brooke, executive director of the Business Centre Association (BCA) said: “Some of our members have enjoyed substantial growth during the past 18 months, yet almost half of the enquiries still come from relatively small yet established industry brokers.
“The leads generated by property agents briefed with finding office space for their clients remain very low, meaning not only that they are potentially failing to meet businesses’ needs but that they are missing out on millions of pounds of fees.”
Ms Brooke was speaking at the BCA’s latest business summit at Abbey Business Centre in the Gherkin, London’s, where more than 130 directors of serviced office businesses met to debate current industry issues.
Her views were echoed both by agents such as Cushman Wakefield and Montagu Evans, and by business centre owners.
Brian Andrews, chief executive of Basepoint Business Centres, was able to report increases in enquiries of up to 33 per cent in recent months, but also highlighted how more than 44 per cent of his enquiries still come directly through brokers.
One director, Edwin Hodges from Business Environment, highlighted that his centres had invested £1m in fees to brokers over two years, yet property agents failed to put a single lead into centres, missing out on valuable fees.
Ms Brooke added: “More and more businesses have realised during this recession that for any location with fewer than 50 staff, serviced offices are generally less expensive than conventional offices.
“In addition, the easy in, easy out management agreements offer greater peace of mind to businesses than a tie into a complex conventional lease.
“Centres enjoying particularly strong growth include those based in unusual or historic locations, those nurturing specific sectors such as technology or design and those catering to a lifestyle with gyms, bars, restaurants and break-out rooms.
“Yet there is clearly still room for growth. While serviced space accounts for less than three per cent of the total market across the UK, as much as 80 per cent of that is still located in London – meaning there is huge potential for growth.”
As well as businesses being attracted by added value services – such as offices providing mentoring, networking and building a community – there was also growth in the number of international business attracted to operating in London due to the weak pound.
Stephen English from Montagu Evans said: “The challenge faced by business centre is that more conventional landlords are entering the market.
'Many are partnering with well known serviced accommodation brands and others are testing the market and viewing managed space as a short term solution to tackle void properties as well as a potential way to avoid Empty Property Rates.”
John Spencer, MD of MWB closed the session with a word of warning: “2008 was a record year, 2009 a struggle, 2010 will remain challenging with potential consolidation in the serviced office market.
“However, over the medium term we will see recovery and we have undoubtedly only scratched the surface in terms of the serviced office sector. What this recession has pro