Serviced Office Sector Moving from Strength to Strength
The serviced accommodation sector in the UK remains buoyant despite a downturn in fortunes for Regus, says one of the leading providers of office accommodation in the country.
Giles Fuchs, group development director with City Executive Centres, which has 11 centres across the UK covering 145,000 square foot, believes the sector in the UK is strong and is growing, and will not be adversely affected by Regus' problems.
He said: "Regus essentially got into trouble because it expanded too quickly and ended up paying too much rent to their landlords. However, even with its current troubles, the company still believes that it will be successfully restructured and emerge from Chapter 11 in a year's time.
"Even though there is a current global slowdown in the economy, we are finding demand for serviced accommodation is still very strong, especially perhaps as companies do not want to tie themselves down with long leases and welcome the flexibility in space that serviced office accommodation provides.
"As proof of this, City Executive Centres currently has 11 centres, with 71 per cent of offices in these centres full including those which opened in the last year. Eight of the 11 centres opened in the last five years and there are another five centres in the pipeline covering 103,000 square feet in Croydon, Isleworth, Bristol, Milton Keynes and Fulham. Our turnover has increased as a group from £1,900,000 in 2000 to £3,775,062 in 2002. These figures are hardly those of an industry in trouble."
This trend is substantiated by a 2002 report into serviced offices, called The Performance of Business Centres over a Complete Cycle written on behalf of Close Business Centre Capital (CBCC). In its executive summary, authors Price and Spicer commented: "Expansion is a consistent theme throughout the serviced office market for the next decade. It is expected to be without doubt that the profile of the industry will increase and the cost effective 'easy in, easy out' idea will lead to a greater demand for serviced offices."
Giles Fuchs added: "The fortune of the larger operators should not be allowed to overshadow the exceptional investment opportunities for the property industry as a whole. I strongly believe that a good quality service and strong relationship with our partners will pave the way for landlords to profit more from their properties and for clients to enjoy flexibility in an industry which has been slow to reach to changing customer needs and wants."