What’s in Store for 2012?
With 2011 now drawing to a close and the New Year beckoning, we take a quick look at the year-to-date stats for Central London ahead of the official release of the Q4 2011 Serviced Office Review series in January, to see how the region has performed over the past 12 months.
Based on this information, Chris Meredith – Head of UK Sales at officebroker.com – shares his views on the past 12 months and gives his predictions on price and performance for Central London and the wider serviced office sector in 2012.
* * * * *
Year-to-date (Jan-Nov) our data shows that deals in Central London dropped by -6% in 2011 compared to 2010, but this doesn’t seem to have affected price; the average price per workstation in Central London has so far increased by 12% this year, rising from an average of ┬ú501 per workstation in 2010 (Jan-Nov) to ┬ú561 in 2011.
This is a healthy improvement on 2009, which saw the average workstation price across the year drop to ┬ú466, but there is still some way to go before prices reach the pre-recession peak of 2008 and its average of ┬ú605 per workstation.
Back in May this year, Jim Venables predicted that Central London prices would return to and even exceed those 2008 levels during 2012; but with the prospect of a double-dip recession on the horizon and on-going financial troubles in Europe, Chris Meredith believes that this is unlikely.
“In Central London we can see that prices are recovering. However I believe that this growth in price is likely to slow down next year,” he said.
While the economy is partly to blame, he is also pointing the finger at an increase in large deals.
“More and more corporates and large businesses are looking in our market,” he said. “Historically companies with requirements of 20+ would go down the conventional route but now they are looking for increased flexibility, short license lengths and the ability to move-in immediately. They are also attracted by the opportunity to expand or reduce their space with minimal fuss, and the flexibility of our market is appealing to them.”
Large corporations that would have traditionally sought conventional leases are now turning to serviced offices in order to fulfil the flexibility they need, and the increase in larger deals is having a potentially negative knock-on impact on price.
“It’s quite common for big deals to be offered at a cheaper per-workstation rate,” he said, “and while it may be a quick solution to fill empty space, it’s not always the best answer for the long-term.
“In many cases the space is being given away at a much cheaper rate than it’s worth because Centre Managers are undervaluing the space and going in at a price that they didn’t need to. This is often completely unnecessary, so if there is any doubt I would always encourage Centre Managers to speak to us before sending out the proposal.”
Commenting on the rest of the UK, Chris believes that the divide between Central London and the performance in other UK cities is likely to become more prominent. “While London should benefit from the buzz of the Olympics and continue to attract foreign companies from growing markets, such as India and Asia, I don’t think that growth will come easy for UK locations outside of London in 2012.”
In 2011 the number of deals across the UK was down marginally by 1% when compared to 2010.
But on a positive note, figures show that 10% more space had been taken up – suggesting that clients are interested in the space and the flexibility of the market is appealing to a wider demographic of businesses. Chris believes that while there may be little growth in price across UK locations in 2012, performance should be upheld:
“I don’t think we will see any backward steps and I believe we will be able to maintain price across the UK,” he said.
Chris again urges Centre Managers to be aware of underselling and to consult their officebroker.com Account Manager for advice.
>> Find out more about price here: Are You Under Selling Your Space?
For further details about price and value, speak to your officebroker.com Account Manager for a second opinion, or speak to one of our Sales Managers for further help and advice on the following contact details:
- Chris Meredith (Head of UK Sales) 0800 111 6 444 | Chris.Meredith@officebroker.com
- Rav Jisdhaul (Sales Manager – UK) 0800 111 6 444 | Rav.Jisdhaul@officebroker.com
- Stephen Preston (Sales Manager – Central London) 0800 111 6 444 | Stephen.Preston@officebroker.com
officebroker.com’s next round of quarterly reports, updated to include Q4 2011, will be available to view and download in January from the Knowledge Centre.