ΓÇ£Elitist LondonΓÇ¥ Could Become Inaccessible to British SMEs
Office-to-residential conversions are eating into Central LondonΓÇÖs serviced office supply. What does this mean for SMEs based in the capital ΓÇô and should we all be concerned?
With London set to lose as much as 8% of its serviced office space, the short answer is yes.
Here at officebroker.com, we broker in the region of 4.5 million sq ft of serviced office product in Central London. Since January 2013, around eight per cent of this product has been or is scheduled to be converted to residential space. ThatΓÇÖs a significant proportion of the capitalΓÇÖs serviced office space and could have a huge impact on business growth.
SMEs and startups ΓÇô priced out of London?
As the supply of serviced office space is reduced, weΓÇÖre likely to see a corresponding rise in prices. With smaller businesses typically those on the tightest budgets, theyΓÇÖre most likely to lose out as a result.
As officebroker co-founder Jim Venables explains: ΓÇ£While new product continues to come to market, supply levels have reduced overall. This places a growing premium on existing stock and could affect the ability of businesses to secure space.
ΓÇ£In what is already a highly competitive market, reduced supply will push up prices even further. But what effect will this have on start-ups and fledgling businesses?ΓÇ¥
Losing the lifeblood of the UK economy
ItΓÇÖs not just SMEs┬áthat should be concerned. As Jim points out, small and medium businesses play a vital part in the national economy: ΓÇ£We often hear it said that SMEs are the lifeblood of the UK economy and the likelihood is that they will be pushed out of Central London. I think this will be to the detriment of the UK economy.
ΓÇ£In a recovering economy, serviced office space is a valuable tool to businesses of all sizes. Not only do serviced offices offer an easy environment in which to operate, but the shorter term, fixed cost basis on which they are provided offers the flexibility they need in order to grow.ΓÇ¥
ΓÇ£The serviced office space coming to market is high-end, resulting in an increasingly imbalanced supply as low-to-mid priced space disappears.
ΓÇ£When we look at the businesses occupying this space, the majority are foreign investors who are more able to absorb these higher costs of business.
ΓÇ£Central London risks becoming inaccessible to British SMEs so business centres who support these clients need to be protected ΓÇô or we risk turning the heart of the capital into an increasingly elitist location.ΓÇ¥
Are LondonΓÇÖs small businesses under threat from lack of office space? How can we help protect serviced offices as an SME resource?