Shanghai Business Centers Benefits

The ‘elastic building’ can help you s-t-r-e-t-c-h- your budget

By John Spencer, chief Executive of MWB Business Exchange.

Businesses, large and small, looking to maximise opportunities without over-stretching their budgets should seriously consider using an ‘elastic building’ advises .

In the current economic climate businesses are having to stretch their resources to the maximum, but the smart move is for businesses to also stretch their office accommodation to ensure that they are not paying for wasted space, unoccupied desks or expensive office equipment which is under-utilised.

As more and more businesses struggle for market share, key issues such as the implementation of new technology and increasing overall profitability are proving increasingly harder to deal with. Such is the scale of the problem that many organisations now routinely find it impossible to plan more than 12 months ahead and even then need to update their plans every three months. In fact, some businesses find it difficult to make any plans at all so why would any chief executive, finance director or property director really want to be saddled with the liability of office space of a fixed size?

Recent research shows that, for instance, 70% of businesses have at least one empty desk at any one time, which means that a company employing around ten people will have at least one empty desk for the equivalent of a whole year. And with a single desk costing as much as £18,000 per year to fit out and equip, in expensive areas such as Central London, it is easy to see how wasted space can have a direct effect on the bottom line.

We have also found the cost of maintaining unused workstations on a conventional property lease can be quite considerable. Taking into account heating, lighting, maintenance, depreciating equipment and, of course, rent and rates the average cost of running a desk in the UK is £35 per day.

The perfect solution is for businesses to adopt the ‘elastic building’ approach, whereby they relocate to flexible office space, which is configured to meet their minimum space requirements. Most providers of flexible workplaces will give advice on planned hot-desking and accommodation for mobile workers, such as salespeople, which will enable businesses to maximise their utilisation of all occupied space.

Most companies do not continuously use their meeting rooms or board rooms and so big savings on office space can be achieved by dispensing with such rooms and instead using the facilities available in the business centre on a pay-as-you-go basis.

Do you really need a permanent meeting room?

Many large corporations, such as major banks, which undertake student induction programmes or staff training sessions, have found that it is no longer cost-effective to operate their own in-house facilities. In reality these rooms often sit empty more than they are used. Such large facilities incur heavy costs even when sitting empty and it is for this very reason that smart facilities managers are now using outside meeting rooms as and when they need them.

However, the real benefits of the elastic building solution are its ability to stretch rapidly and easily when business peaks create demands for additional workspace. These new workers can be accommodated easily and adjacent to the existing team, negating the needs for the business to relocate to larger premises, or worse divide its new enlarged workforce across more than one location. Once the peak is passed the office space contracts back to a more appropriate size and occupancy costs are reduced once again.

The elastic building can provide savings on all fronts. In addition to providing worthwhile savings against the expense of under-utilised office space, managed workspace can provided proven cost savings of up to 50% on the total occupancy costs, when compared with the traditional office space acquisition methods. So the elastic office could be the perfect way to put some bounce back into the fortunes of SMEs and large corporates across the UK.

Nothing kills possibilities like a 15 year commitment to vacant space

Many organisations that grew rapidly at the end of the last decade signed long-term leases for office space based on their then current, or future projected space requirements. Now that their rate of growth has ground to a halt, or maybe slipped into decline, the inflexible nature of their property leases means that the number of empty offices they have to continue to pay rent on is having a negative effect on their bottom line. While speeding ahead of competitors creates possibility, nothing kills possibilities like a 15-year commitment to vacant space.

Forward thinking businesses are now finding that they can minimise their financial risk when relocating, by taking advantage of the flexible lease deals available from serviced office providers such as MWB Business Exchange (MWBEX). As a division of the MWB Group Plc, a listed property company, MWBEX is well placed to provide occupiers with both the expertise and the property background to deliver genuine occupancy cost and risk reductions. And being part of a large property group brings us the financial stability and market resilience to ensure that we can provide genuine occupancy cost savings over a long period of time.

No long term commitments

Businesses taking flexible/serviced office space benefit immediately by not having to make any long term financial commitments – other than three months rent. In addition, customers can pre-book MWBEX support staff to provide cover for holidays or maternity leave and they get consistency of quality as they will already know the centre team personnel. In addition, the use if such support staff means that businesses do not have to pay for deskspace in their own offices, further reducing their overheads.

Such flexible secretarial services not only reduce a businesses start-up costs, while minimising the need to hire their own full time secretaries, they enable businesses to focus their financial resources on their core operations and transfer financial risk away from their business.

While some SMEs may still not fully appreciate the cost benefits of flexibility provided by serviced office outsourcing, these benefits are already widely appreciated by those working within the commercial property industry. During 2002, Chestertons published their Vision of the Future Survey, which examined the changes that more than 500 property professionals expect to see by the year 2007.

Not surprisingly, the majority (81%) of those surveyed said that they expect to see a reduction in the length of commercial property leases to five years or less. Perhaps even more interesting was the fact that most believed that, within this period, tenants would also switch to paying fixed all-inclusive annual prices for their office space. Neither of these benefits is currently available outside of the serviced office sector.

Of course the real advantage of serviced office space is not just that it is more cost affective to occupy than taking a conventional lease, but that its inherent flexibility allows businesses to right size for their current needs. So they don’t have to pay for office and meetings rooms that are sitting empty and can focus their resources on what they know best – their core business.