Single desk enquiries 37% up in 2009, despite slowdown in November
In October 2009, officebroker.com published a report that linked an increasing number of single workstation enquiries to a growth in start-up businesses. Now well into the final quarter of the year, we look further into this trend to establish whether start-up firms have been able to uphold the optimism demonstrated during Q3.
Since the start of 2009 to date (January-November inclusive), statistics from officebroker.com show that the number of businesses enquiring for office space of one desk in 2009 were 37% ahead of the same period in 2008.
Throughout the year, enquiries for single workstations in 2009 followed a relatively steady upward curve until August, apart from a minor setback in March, where enquiries for single desks dropped by -14% from the previous month. July also saw a marginal month-on-month decrease of -1%. But overall, the rise of single workstation enquiries was relatively consistent.
This trend then peaked in August, producing a 15% increase over the previous month.
See the below graph for a representation of this trend. The graph shows month by month enquiries for single workstations throughout the UK in 2009, compared with 2008:
Commenting on Q3’s increase and the significant rise in enquiries throughout 2009 when compared to 2008, officebroker.com Managing Director Jim Venables said:
“I’m not surprised that enquiries for single workstations are up. There are a lot of people being made redundant, and this rise in single workstations and smaller offices seems to be linked to that.” He added: “There are a lot of good quality people out there that have been made redundant, and many of these skilled individuals are taking advantage of niche opportunities to set up their own business.”
Similarly, Business Link advisor Ganesh Selvarajah said that the downturn gave many individuals “food for thought” in the sense that they were looking at self employment as a “definite alternative” to employment.
Possible slowdown of new start-ups in Q4
However since August, single workstation enquiries have begun to deteriorate. Figures dropped by -11% to September, increased slightly by 2% into October, and then dropped again by -9% in November. This suggests a possible slow down in the number of new start-up firms or individuals becoming self-employed.
One possible reason behind the drop in single workstation enquiries could be as a result of a slight improvement in the economy, which could be leading to improved prospects for workers that may otherwise have faced redundancy. This may be encouraging currently employed individuals to temporarily shelve their entrepreneurial plans.
Another reason could be related to the cost of an office, and the possible slowdown in the amount of incentives on offer from office providers. Reports suggest that the UK economy is finally returning to a period of growth – albeit a slow one – which could be enough to inspire confidence in office providers, end encourage them to remove certain incentives or increase rents while the opportunity is available.
However despite the drop in enquiries last month, one very apparent feature of the above graph is the year on year comparison between single workstation enquiries in 2009 compared with that of 2008. As shown by the graph, 2009’s month-by-month figures stayed consistently ahead of 2008.
The most obvious difference occurred in January, where 2009 was 146% ahead of the same month in 2008. August produced the second gulf, with August 2009 77% ahead of the figure recorded in the same month in 2008.
The slowdown in 2009 enquiries towards the end of Q3 and into Q4 were mirrored by the same period in 2008, which suggests that this decline is seasonal, as opposed to a problem or specific trend emerging in 2009 alone. November’s drop in single enquiries could be related to the Christmas season, which may be encouraging potential clients to put their office plans on hold until the New Year.
New year, new business?
With 2009 currently 37% ahead of 2008, this is a significant result for 2009. And if Christmas is indeed causing many would-be entrepreneurs to shelve their plans until the New Year, then Q1 2010 could see a renewed surge in single desk enquiries.
Furthermore, despite the slow return to growth predicted in 2010 for the UK economy, recent reports claim that UK unemployment could continue to rise until 2011.
The Organisation for Economic Co-operation (OECD) has forecast that UK unemployment rates will rise from the current 7.8% to 9.3% in 2010 and 9.5% in 2011. This is a blow to hopes of a UK recovery, and if this forecast is brought to fruition, this instability may result in more workers turning to self-employment. As a result it may also push up single desk enquiries in 2010.
Unemployment figures could be worsened by the possibility of some firms outsourcing their requirements, in a bid to reduce the cost of salaries, as well as the overheads associated with UK office space and equipment.
A recent survey by IT firm silicon.com claims that almost half (47.5%) of respondents said their organisation has probably offshored IT jobs – up from more than a third (36 per cent) last year. One third (32%) of respondent s also believe that offshoring could trigger redundancies – a rise of 4% from last year’s survey.
This combination of a forecasted rise in unemployment along with potential outsourcing could lead to further increases in new ventures. While many individuals may be holding back from embarking down the entrepreneurial route or making enquiries for office space this side of Christmas, it will be interesting to see how the performance of single workstations fares in the New Year.
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