Office Trends are Changing in 2013
In the recent publication “UK Real Estate Predictions 2013”, Deloitte has analysed the current state of the UK real estate market, including the state of new office builds. The findings suggest that, apart from in the Capital, office values are currently lower than build costs. Given the many issues causing this lack of development, one of the only potentially effective solutions suggested would be to reduce building specifications – and technology may be the key to making this work.
Deloitte’s recent development report ‘London Office Crane Survey’ demonstrates the strength of office development in London, though in contrast, there is very little indication of construction activity across the rest of the UK. There is a very clear reason for this – high office values in London make construction economically viable, whereas lower office values across the rest of the UK don’t. Increasing office values and falling construction costs would both help to address this problem, though it is not thought that rising values would be enough in the short-term to make any real difference, and given the current state of the construction industry there is not a great deal of room for gaining any useful savings. As such, there is little benefit in focusing on value or construction costs to increase the viability of new office buildings.
Another solution is to reduce building specifications, and thanks to technological advances – some related to construction and some not – this solution looks much more promising. For regional locations, the only effective way to create viable office developments is to reduce construction costs, and the only effective way to reduce construction costs is to reduce building specifications and requirements. Technology is a prime enabler here.
Over the last three decades, many new consumer and commercial technologies have been introduced, and while many of them have resulted in office buildings that are more advanced than ever before, key technologies like mobile computing, Wi-Fi and cloud computing are facilitating the redundancy of built-in IT infrastructures. The elimination of such infrastructures from building requirements is an easy way to cut costs, and with other technology resulting in less required space for each employee, the size of real estate can be significantly reduced.
Modern working culture can also play its part in increasing the viability of new office constructions outside of the City. The evolution of modern working practices, brought on by technology and shifting working attitudes, is helping very much with the viability agenda. Remote working, activity-based working and ‘bring your own device’ programs are becoming more widespread, reducing the layout of offices and the amount of office space needed. In comparison to only a decade ago, many businesses are able to run with the same level of efficiency and productivity for a much smaller technological outlay and a smaller real estate investment.
It is important for business owners to recognise these changes and not let themselves stay stuck in the past. If businesses are able to throw away the established preconceptions of what a good office space is supposed to be, they will gain much higher viability for their office build. For such businesses struggling to make their build viable, now would be the time to throw away thoughts of open-plan, spacious working areas, unnecessary conference and seminar rooms and expensive IT, network and cooling systems, and start thinking about how new technology and the new, flexible working practices of today can help them acquire a great office space with much lower rental and running costs. Pushing for lower office specifications is now a smart move for many types of business.