For the last few months, we have been witnessing migrating birds flocking from the UK to spend their winters in warmer climes. This got us thinking about another phenomenon of migration that has been taking place over recent years: the movement of corporate presence out of London, specifically to the South East. The rise of London as a business powerhouse is well documented, and like many success stories, it has become a victim of its own success. With Central London rents inflating out of the realistic reach of standard budgets, many businesses have been forced to re-think their priorities and look elsewhere.
The answer for some businesses and organisations has been to attempt to stay within London’s boundary with suburban locations such as Croydon or Whitechapel. Whitechapel to the East currently offers a cheaper price tag than neighbouring Shoreditch. However, prices won’t stay low for long. Similarly, a budding tech scene is starting to form in Croydon to the South. With office-based employment across regional cities forecast to grow by up to 4.6 percent over the next five years, the likelihood is that migration will extend even further.
There are reports both positive and negative about the potential impact of HS2 and Crossrail on businesses both in and out of London. Beyond the very material impact for property owners within the safeguarding areas of the schemes, the result of increased connectivity should enable business out of London to grow in importance and clout. So it is clear that access to London remains pivotal for regional locations, whether this means a location geographically close such as Surrey or Hampshire, or much further afield like Manchester, Birmingham or Edinburgh.
But why do companies really move premises? Yes, sometimes it’s the rent but most organisations are actually driven by finding better quality accommodation and retaining staff, rather than cutting costs. In this way, many organisations choose to stay in the same area, indeed the most popular relocation distance is just 0.5 miles. The key as a commercial owner, however, is to avoid your tenants making this move from your location. Maintaining the quality of space and keeping up to date with current expectations of a business property are areas which commercial property managers control as a matter of course.
The future of location in corporate business is likely to be a spread of business environments. Indeed, some firms are already looking to split their bases to cover both in and out of London locations, mainly looking to counties like Surrey or Hampshire. Understanding how this trend should influence an initial purchase is an insight that commercial property managers can offer to investors.
Any time we start something new it is exciting and we are very motivated and committed. As time goes by, however, the burst of enthusiasm can wane as the reality of how much work is going to be involved kicks in. When you find yourself slacking a little and not being as enthused about the new change or goal you are working towards, that isn’t a sign to quit. It is a sign that it is time to re-commit.Meet the team