(PRWEB) July 20, 2006
The overall density at which buildings are occupied is rising, with new research revealing that occupiers in the South East office market are increasingly adopting a more intensive use of space with historic allocations of 140 – 190 sq ft, now reducing to 120 – 130 sq ft per person, according to a new report published today by international property consultancy Knight Frank LLP in association with Ramidus Consulting Limited.
The M25 Office Market Demand Research Paper assesses the changing requirements of occupiers within the South East office market which is seen as the economic powerhouse of the UK. Against the backdrop of wider economic forces, the paper highlights the key issues and trends affecting the way in which companies occupy their office space within the South East office market. The report cites over 50 companies which have exposure in the M25 office market, including: BAA, BP, Centrica, GlaxoSmithKline, Microsoft, Sun Microsystems, and Vodafone.
As a consequence of flexible workstyles, companies are “sweating” their assets to accommodate more people in less space as increasing emphasis is being placed upon cost efficiencies. New technologies have enabled different and more flexible workstyles which have allowed organisations to become much more fluid in their use of space. New standards for best practice in space management are challenging previously accepted norms in occupancy density. These trends are also encouraging different approaches to building specification where cost and value are considered key elements in the overall design of the building.
Catherine Penman, head of research, Knight Frank said: “The increasing focus upon cost efficiencies and the more intensive use of space will ultimately impact upon the requirement for an adaptable property portfolio. For example, growing numbers of companies are moving towards a core and periphery strategy whereby they retain a core of buildings on long-term commitments to accommodate stable demand, with additional capacity provided through more flexible arrangements that might be short leases or serviced office space.”
The “talent war” that many companies now face in order to attract and retain the right calibre of staff to fuel growth and competitive advantage is a significant issue of concern within the South East office market. This competitive environment is leading to the need to provide a high quality work environment with appropriate amenities in order to attract and retain the calibre of staff.
The implication of the research undertaken is that the property market can no longer rely solely on economic growth to soak up excess space and precipitate a new cycle of supply. As companies search for more flexible occupation for an increasingly mobile workforce, so the supply industry will need to respond with new products appropriate to the new patterns of occupation.
As boardrooms accept more responsibility for investment decisions, and as corporate real estate managers have better cost containment tools at their disposal, so the acquisition of new space becomes a less reactive process. Occupiers are becoming more discerning about the quantum and quality of space they occupy, and over the terms under which they do so. The implications for the leasing and investment markets are clearly significant.
Emma Goodford, head of national offices, Knight Frank said: “The research has endorsed a discernable trend in the office market that, despite an improving economy and positive financial results from many occupier sectors, to date take up in key M25 market areas has not witnessed significant growth. Occupiers are utilising space more efficiently and making greater demands on the space they hold. However at the same time occupiers need to create office environments that attract and retain the best workforce. Cost also remains crucial as an overall part of the property strategy.”
About Knight Frank
Knight Frank is a leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based partner Newmark Knight Frank operate from over 140 offices in established and emerging property markets on five continents. Last year, the companies handled transactions valued at over $41 billion with annual revenues of over $545 million. With a combined staff of 4,500, this major force in real estate is meeting the local and global needs of owners, tenants, investors and developers worldwide.
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