According to recent data, securing premises in bustling urban hubs is becoming more challenging. Cities are increasingly crowded as the ability to spread operations into the green belt is curtailed by policies, local ordinances and politicians wanting to preserve space.
Consequently, buildings are rising taller, as exemplified by cities across North America and, incidentally, now parts of Asia. These changes are profoundly affecting urban landscapes, particularly in cities’ cores where much of the activity takes place.
Businesses going through these transitions require extensive adaptation. Many find themselves paying astronomical rent in the core of urban areas, simply to gain access to transport links and the widest pool of available workers.
“The changes in the urban market are striking,” says Certain Surveyors, a company that helps evaluate premises for faults before they change hands. “We’re amid two secular trends: the strengthening of the green belt around cities, and mass urbanisation, which continues rapidly even in the economically mature West.”
The quest to find suitable premises in crowded cities is taking on new dimensions. Companies are looking for ways to escape the high costs, or at least mitigate them. There’s a drive to make workplaces practical again.
Flexible Leasing Options And Co-working Spaces
Chief among these strategies is the rise of flexible leasing options and bespoke coworking spaces. These attempt to cut costs by operating different business models.
“Previously, firms had no choice: they had to take out long-term rentals on office space and deal with all the penalties that came with them for ending their tenure early. Now that’s all changing in many cities with mobile workforces. Companies have much more flexibility than before,” Certain Surveyors explains.
The primary driver of this change is new spaces rentable by the month, day, or hour. Provider firms are leasing out office space without the usual contracts, giving companies more leeway to chop and change their operations as they see fit.
Many of these spaces are what’s called “plug-and-play” in the industry. This terminology means that companies like startups can move in immediately and start working without performing any fit-outs. Everything is ready to go and customisable – superficially at least.
Optimising Smaller Spaces
In places like New York and San Francisco where space is at a premium, many smaller businesses are thriving by opting for smaller premises. You now see companies looking for ways to economise on square footage that didn’t occur in the past.
“The switch to hybrid working is driving much of this shift in the companies,” explains Certain Surveyors. “You now have more people working from home on any given day, so the requirement for in-office desk space is less than it used to be. Companies still need to factor in redundancies and spare capacity, but these new working arrangements open up the possibility of a change in rental agreements.”
Optimising space is also taking the form of simply ensuring that offices have a smaller footprint. Modular furniture and minimised printers and scanners are playing a role in this evolution.
Networking And Local Partnerships
Building relationships with property managers, surveyors, real estate agents and other people involved in leasing commercial buildings is also playing a role. Companies are using these professionals to locate suitable premises in crowded cities, finding deals and bargains where available.
Discovering these opportunities is often more challenging when these networks don’t exist. Companies often find themselves downstream from the most lucrative sources of information and are unable to capitalize on opportunities when they arise.
“People in the real estate industry, like us, often know when specific properties are going to come onto the market,” says Certain Surveyors. “Private networks typically know when a building is likely to go up for sale before it happens, enabling people in these groups to put in early offers and start the negotiation process immediately. Often, these deals are on far more favourable terms than would be possible by simply waiting for the official sites and platforms to register their listings.”
Using Areas Outside Of The City
Using areas outside of the city is another strategy businesses are using to gain a foothold in some locations. However, opportunities for this are often few and far between.
The good news is that hubs and business zones exist across the country. Accessing them is challenging, but at least the cost of renting is lower than in conventional locations.
Many of these are in the suburban areas, often part of developments that coincided with housing developments. The size of the business entrepreneurs can set up in these locations is usually limited by various ordinances. However, these locations are often suitable for chains and companies that want to engage in smaller-scale operations.
“The ability of businesses to locate out of town is always an option that’s been there,” says Certain Surveyors. “These properties are often built cheaply compared to those in the downtown areas, meaning companies need to be careful before they take the plunge and move in. However, the pure economics of being a long way from the most desirable spaces slashes rents and can help companies be able to draw staff from the nearby areas.”
Using Non-Traditional Spaces
Finally, companies are also trying to find suitable premises for their operations in non-traditional spaces. These areas were often previously demanded by other business types that no longer require them.
What’s great about these areas is that they usually wind up looking and feeling better than conventional glass and steel office blocks. An old warehouse or factory upgraded to modern office standards offers character and aesthetic opportunities you simply don’t get with conventional buildings.
Repurposing cafes is also something that is being done more and more. Taking old defunct buildings and turning them into something usable by modern businesses gets around the crowding problem, especially for firms who can think inventively about projects.
“Businesses love these space opportunities because they help them bypass so many problems. However, they need to be careful to check whether this real estate is in a suitable condition for moving into,” says Certain Surveyors. “Many of these properties can cost a fortune to put right.”
