Service Office Review: Yorkshire & Humberside Q4 2009
Service Office Review: Yorkshire & Humberside Q4 2009
The following report utilises statistics for Q4 09 from
officebroker.com, the UKΓÇÖs leading independent broker
of serviced office space, along with external reports to
present findings on activity within the serviced office
industry in comparison to Q4 08.
The report presents results on the following key areas
in the Yorkshire & Humberside region:
ΓÇóSupply of and demand for serviced office space
– In terms of the number of enquiries, the size
and shape of those enquiries and the number of
ΓÇóNew Serviced Office Tenants:
– In terms of workstation prices and initial license
Using the statistics from these areas, a detailed
overview of the serviced office industry in Yorkshire &
Humberside was compiled to provide a comparative
analysis of the changes within the serviced office
market during Q4 09.
ΓÇó28 new serviced offices
added to the officebroker.com
portfolio in Q4 09
ΓÇóEnquiry levels dropped by
ΓÇó+ 63% increase in new
serviced office tenants (SOTΓÇÖs)
ΓÇóAverage number of
workstations per SOT was 4.2
ΓÇóWorkstation costs increased
to ┬ú187.00 p/m
ΓÇóInitial license agreements
decreased to 6.8 months
SUPPLY OF SERVICED OFFICE SPACE
ΓÇó28 new serviced offices added to
officebroker.com portfolio in Q4 09
The total number of serviced office buildings reached
224 in the Yorkshire & Humberside region during
Q4 09. This peak figure followed the addition of 28
new office buildings to the officebroker.com portfolio
during Q4 09.
The 24 serviced office buildings added in Q4 09 were
part of 89 buildings added during the whole of 2009.
These additions represented a +40% increase in the
number of serviced office buildings available within
the Yorkshire & Humberside region.
As demonstrated by Fig.1, increases in the number of
serviced office buildings occurred quarter-on-quarter
in 09, with the sharpest rise taking place between Q2
An increase in the amount of new serviced office
buildings coincided with prime rent levels in
commercial centres reaching what is expected to be
their lowest level before beginning to rise once more.
This activity suggests that serviced office providers
remain optimistic about the appeal of serviced offices,
having taken advantage of the lower prime rents to
secure additional commercial property for conversion
to business centres. Such investment points toward
providers long-term commitment levels and how
serviced offices have become increasingly appealing
to SMEΓÇÖs and business start-ups.
DEMAND FOR SERVICED OFFICE SPACE
ΓÇóEnquiry levels dropped by -10%
in Q4 09
The number of new enquiries received for serviced
office space decreased by -10% in Q4 09, marking
the fourth consecutive financial quarter to record a
decline in enquiry levels, with Q1-Q3 09 showing an
average deficit of -6% on 08 levels.
As shown in fig.2, enquiry levels fell below 08 levels
in both October (-10%) and December (-28%)
while registering a minimal increase of +3% during
The decline in enquiry levels, such as that witnessed
in the Yorkshire & Humberside, is a trend that has
been experienced nationally throughout both Q4 09
and 2009 as a whole, declining throughout the UK by
This larger than average drop in Yorkshire &
Humberside could indicate the attitudes of business
owners within the region, pointing toward a hesitancy
or lack of available resources for them to once more
begin expanding or founding their operational spaces.
NEW SERVICED OFFICE TENANTS (SOTS)
ΓÇó+63% increase in new serviced office
Despite the fall in enquiries during Q4 09, the number
of new SOTΓÇÖs entering the market increased by +63%.
This increase followed rises of +108% in October,
+47% in November and +36% in December above
2008 levels. (Fig. 3)
This increase on 08 levels marked the second
consecutive financial quarter to experience growth
in SOTΓÇÖs, with Q3 09 having also recorded a +3%
increase on Q3 08 levels. This period of growth
followed a -39% decline in SOTΓÇÖs during Q2 09.
The continued growth in SOT levels during the final
two quarters of 09, shows that a large number of new
individual businesses have begun entering the serviced
office market despite the reduction in enquiries.
Such activity demonstrates that those businesses
entering the market have been ΓÇ£serious buyersΓÇ¥ and
that more speculative browsers have faded away.
While the lower levels of SOTΓÇÖs seen in 2008 could
reflect how businesses were responding to the
impact of economic recession, with business owners
becoming hesitant and less willing to commit due to
the uncertainty of the financial climate, the continued
growth in this area however shows that any hesitancy
has past, with SOTΓÇÖs on the increase in Yorkshire &
Humberside and a new influx of businesses taking
advantage of the inherently recession and budget
friendly nature of serviced office space.
AVERAGE WORKSTATIONS PER SOT
ΓÇóAverage workstations per SOT
reached 4.2 ΓÇô increasing by +18%
The overall increase in new SOTΓÇÖs during Q4 09
corresponded with a rise in the number of workstations
being taken-up per SOT throughout the financial quarter.
At the close of Q4 09 the average number of workstations
per SOT reached 4.2, an +18% increase on the 3.5
workstations being taken per SOT during Q4 08.
A month-by-month analysis (Fig. 5) shows that
workstation requirements increased continuously
throughout the quarter, the overall effects of which were
boosted by the +37% increase seen in October and
supported by more moderate rises in November (+11%)
and December (+2%).
While smaller workstation requirements became a
dominant trend during 09, falling nationally by -34% and
averaging 3.6 workstations, it would appear that Yorkshire
& Humberside has enjoyed a far higher level of growth,
further evidence for which can be seen in the +29%
increase in workstation sizes also recorded in Q3 09 while
continuing to fall nationally by -13%.
SERVICED OFFICE SPACE COSTS
ΓÇóAverage price per workstation was
┬ú187.00 p/m – up +8% on Q4 08
During Q4 09 the average price per workstation
increased to ┬ú187.00 p/m from ┬ú173.00 in Q4 08,
representing an +8% p/m increase.
A month by month comparison (Fig. 6) of Q4 09,
reveals that average workstation costs exceeded Q4
08 levels in two out of three months, with October
increasing +15% and December by +45%. November
did however record a -18% deficit on Q4 08 levels.
Average workstation costs decreased by -10%
nationally during Q4 09, resulting in the +8% increase
recorded in Yorkshire & Humberside being only 1 of 4
UK regions to experience a rise during Q4 09.
The upswing witnessed during Q4 09, which followed
a -24% decrease in Q3 09, suggests, particularly when
coupled with the rise in SOTΓÇÖs and workstations prices
for the same period, that the serviced office market has
Compared to the national average workstation cost of
┬ú258.00 recorded for Q4 09, Yorkshire & HumbersideΓÇÖs
average p/m cost of ┬ú187.00 per workstation places it
┬ú71.00 per workstation below this nationwide level.
INITIAL LICENSE LENGTHS
ΓÇóInitial license length commitment falls
to 6.8 months
New SOTΓÇÖs are signing initial licences averaging 6.8
months in Q4 09, 2.7 months (-28%) shorter than in
the same period in 2008.
One possible explanation could be a reluctance by
business owners to over-commit, particularly
with the harsh lessons of a recession still fresh,
instead focusing on short and mid-term requirements
that provide a greater deal of flexibility to their
A secondary explanation could be the direct influence
of office providers. If a recovery is to happen in 2010
and the growth in Yorkshire & Humberside continues,
then allowing occupants to secure terms beyond
Q2 10 may be counter productive. By encouraging
occupants to reduce initial licence length, providers
are ensuring the opportunity to renegotiate rates at an
earlier juncture. This would allow current market rates
to be introduced, creating an environment where profit
levels could be raised in line with market demand.
When taking into account all the information for Q4 09,
the following findings can be drawn:
ΓÇóEnquiry levels have continued to fall, exceeding
the national average for the same period.
ΓÇóThe overall number of new serviced office tenants
rose during the financial quarter ΓÇô suggesting an
increase of individual new businesses entering the
serviced office industry.
ΓÇóLarger workstation requirements returned to the
market, suggesting that businesses are once
more expanding their operations.
ΓÇóAverage workstation costs began to climb,
exceeding national averages for the same period.
ΓÇóInitial license lengths fell as SOTΓÇÖs failed to
capitalise on the lower rates available from
serviced office providers.