BCA MarketWatch: November 2014
The Business Centre Association provides a quarterly comment on the business centre market, comprising Serviced Offices, Managed Workspace, Co-working and Virtual Offices
The following information has been collated from the BCA board meeting in November 2014. The BCA has also reached out to Operators around the country who have provided a summary of overall business performance including factors such as lead flow, rental value, quality of enquiries and any particular challenges they have faced over recent months.
Locations outside of London reporting slower numbers of enquiries
- Average rental values are generally up versus last year
- Meeting rooms business is increasing in many areas
- The number of tech businesses taking space is on the increase
- Broker leads are up with some concerns about general quality
The two previous editions of MarketWatch have reported an increasing level of optimism among operators. It was widely reported that the number of enquiries remains strong particularly in London and the regions.
Larger space enquiries have been strong in London and there has been an increase in the number of enquiries for shared space across the regions with more clients considering this over private space.
We have also been informed that there has been an increase in the number of short-term space enquiries for projects starting in the New Year and with limited space availability in areas of London, decisions are being made very quickly. We are also seeing an increase in new start-up enquiries for space in early 2015.
London has seen an improved conversion level and a growing number of enquiries in the last 2 months.
The City of London continues to have a good year with the general consensus that enquiries have been better in terms of quality and numbers and conversions have also been strong throughout the year.
The City continues to perform better than the West End but it should be noted that there has been an improvement in West End performance compared to the summer as would be expected. It was also reported that October had seen a significant improvement in both enquiries and deals.
Bracknell report enquiries have been down compared to a year ago, but conversions have improved.
Wembley has seen excellent year on year occupancy growth.North London and Hertfordshire both report occupancy being up year on year with strong increases in revenue of up to 11%.
Overall enquiry numbers were reduced however conversions were up year on year
In Essex enquiries have been slow and workstation rates have remained flat compared to a year ago.
Oxfordshire remains buoyant with high occupancy rates, however, there has been a slow-down in the number of enquiries coming through during the last 2 months.
It was also noted that the time from enquiry to deal had extended to around 6 weeks. MarketWatch can report a growing number of Tech and IT businesses taking space in this region.
Operators in Southampton and Fareham confirmed that enquiries remained strong and conversions continued to improve.
Carlisle reported that the usual quieter month of August had been busier than expected. Since then enquiries were generally down, however, the average workstation rate has remained consistent.
Bristol has seen an improvement in sales in the second half of the year.
On the south coast, Brighton reported that it’s taking longer to convert enquiries which is having an impact on occupancy.
Birmingham and Milton Keynes have seen rate increases and occupancy improved.
Manchester has continued to see growth over the year with enquiries up and overall conversions positive. It was also reported that desk rates are steadily increasing with some locations reporting year on year growth.
In summary, operators in England are cautious with lower numbers of enquiries and some challenges around conversion, however they remained focused on an improving level of business confidence in many areas. Almost all said that they had managed to retain a higher proportion of client’s year on year and reported improved workstation rates.
MarketWatch can report that Meeting room sales continue to increase with many operators reporting strong annual growth. Virtual Office sales have also been improving across most regions.
Scotland reported that the referendum had impacted on the number of enquiries hence conversions were lower in August and September. October showed confidence returning with improved levels of enquiries. This was particularly significant in Glasgow.
Edinburgh remarked that the number of enquiries were lower during the referendum period. However, they have now improved and Workstation rates have increased. Occupiers are now a more diverse mix of businesses including oil and gas, finance and new tech businesses.
Aberdeen continues to enjoy a steady increase in both leads and conversions.
Enquiry numbers remain strong across the regions, with London seeing more large enquiries coming to the market looking for a Q1 2015 start date.
The City of London has seen a rise in enquiries although the quality of leads has decreased in areas such as Shoreditch.
Glasgow was the only location in Scotland that did not see a slow-down in enquiries during the referendum.
Price is easier to hold at a higher rate particularly in London where demand remains high with strong occupancy levels.
Birmingham, Dublin, Glasgow and Manchester are seeing rates improve due to the lack of available space in these markets.
Trade Suppliers – Technology
It’s interesting to note that we have received reports that operators are replacing legacy telecoms systems and moving to high speed internet platforms.
Continuing strong increases in demand for meeting rooms and virtual offices
- More start-ups and small businesses; shared facilities are performing well
- Some operators increasing local marketing initiatives to increase self-sourced enquiries
- Many operators reporting stronger retention levels than a year ago
Issues / Challenges
Some locations like Bristol and the south coast are experiencing low volumes of enquiries