Prices gradually rose as more employees entered the workforce following the recession and buyers needed additional space for the workers. In addition, rising furniture and equipment costs contributed to higher prices
Los Angeles, CA (PRWEB) November 22, 2014
Buyers of serviced office space have a buyer power score of 3.9 out of 5, which indicates buyers have an advantage over suppliers during the negotiation process. The moderate level of substitute goods and the low level of switching costs provide buyers with more power; however, the medium market share concentration can affect buyers' ability to find a large supplier.
“As functional yet flexible workspace gains popularity over traditional office space and increasing construction leads to more refurbished buildings, prices for serviced office space will rise,” according to IBISWorld business research analyst, Aileen Weiss. Increasing global activity will send more employees abroad, while expanding businesses forces buyers to consider remote work locations rather than leasing large office spaces. Prices will continue to rise as serviced office space is in higher demand, although buyers can gain power by considering substitute work place options.
Low switching costs will also improve buyer power. If buyers must switch suppliers, buyers will not face great time or financial costs in selecting a new supplier. However, buyers should include an early termination clause in the contract to avoid any unnecessary costs.
The medium market share concentration both helps and hinders negotiation power. The largest supplier in the market holds more than one-third of total market revenue, but the majority of firms each have less than 1.0% of total revenue. The largest firm has more room to negotiate lower prices due to its higher profit margins, although it also dictates market trends. The smaller firms are in high competition with one another and will not have as much room to negotiate lower prices, but these firms might specialize in a particular niche or region and be able to help buyers with a more specific need.
Overall, serviced office space allows buyers to reduce overhead costs by lowering rent, furnishings, equipment and other costs. This option is more practical for buyers that require space for a short period of time or for fewer employees. “Although prices are forecast to slowly rise in the three years to 2017, buyers should keep in mind that real estate and equipment costs could unexpectedly fluctuate and cause service prices to jump,” says Weiss. Major vendors include Regus PLC, Servcorp Ltd. and Alliance Business Centers Network. For more information, visit IBISWorld’s Serviced Office Space procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of serviced office space. Serviced offices provide a temporary office space, workstation, meeting room or virtual office for businesses that do not require or cannot afford to rent a large space. Serviced offices expand capacity and lessen the burden of catering to a large group when such activities are infrequent. Serviced offices are also referred to as executive suites, open plan offices, office business centers, flexible offices, furnished offices, managed offices, office hoteling or shared-office spaces. This report does not include conference and convention centers, hotels, motels and inns.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.