Do you have empty premises which are suitable for conversion to either serviced offices or managed workspace.
If so, read on.
There are opportunities throughout the country to redevelop empty offices and create business centres.
These tend not to be grade A, are in need of refurbishment and probably not in prime locations.
There are also a number of operators who are offering their services to manage business centres. This is not surprising when the traditional market is suffering yet many business centres are thriving and looking for expansion opportunities.
Apart from providing revenue opportunities, there is a saving on Empty Property Rates
There are however a number of barriers·
- Cost of fitting out
- Understanding the model
- Understanding the risk
There are plenty of operators who will offer management services but the question is who will fund the fit out.
Outside of London, operators tend to want the property owner to fit out the building.
But often banks will not support additional capital being invested in the property.
There needs to be faith put in the ability of the operator and track record is vital
Property developers, their agents and advisors and the banks are used to dealing in traditional terms with FRI leases and let to good covenants.
They tend to see the risks rather than the advantages.
Services Offices are let on flexible licences to smaller businesses and the centre demands more intense management.
There are however a number of advantages·
- Smaller offices are easier to let
- The market place is larger and there is a ready supply of new enquiries derived from non traditional marketing sources
- Occupancy is quicker with fewer concessions to entice occupiers in
- Cash flow is stronger
- Credit control is easier
- There are other revenue opportunities
However you need to be aware that ·
- This is a service industry and not traditional property
- Occupiers are clients or customers and not tenants
- In most cases they need good multi tasking staff who understand the product and are passionate about it
- One of the key ingredients is delivering a high quality of service
- Costs need to be understood and planned with good budgeting.
The latter point is particularly true as rents are usually inclusive or partially inclusive.
The main risk still falls on the property owner and the operator will argue that it is his reputation which is at risk
It is essential to :-
- Choose an operator with a proven track record
- Have systems in place which are completely transparent
- Have a simple management agreement which clearly states the managers responsibilities and how the revenue is shared
There are ways to share the risk between owner and manager.
Developing a serviced office is not just about putting up a few partitions and letting space. There is much more to it than that.
You need a real level of expertise which only comes with experience, and having the knowledge to keep up with the current trends.
The main focus is always on serviced offices but the same criteria apply to managed business space (offices and light industrial space in a managed environment).
Demand for this type of space appears to be increasing with little new product being created.
There are opportunities to create business centers from vacant poorer quality offices or redundant factory buildings but anyone investing in this needs proper advice.
I am the leading independent expert on Business Centres in the UK. Please have a look at my website www.thebusinesscentrespecialist.co.uk
If you have property which would be suitable for conversion to either a serviced office or managed workspace, I can advise you on all you need to know to run it yourself or I can find an operator to manage it for you and advise on the terms
Please contact me on 07879 48 58 98
or email me at firstname.lastname@example.org