According to figures in the latest report from a leading global property advisor, around 14 million square feet of office space in London is now lying unoccupied. This figure is at its highest since March 2007 and shows an increase in vacancies of 36.5% in the last 12 months alone. The commercial property market is directly tied in to the behaviour of the banking system; with banks like HBOS and the Royal Bank of Scotland now being controlled by the government, the likelihood is that even more unused office space will appear on the market as the Treasury implements its plans to streamline the systems of these major financial institutions.
As the banks seem to be setting the template for other businesses, the immediate future for the London office market from a Landlord's point of view still looks bleak: many corporations are making redundancies and are either down-sizing on their premises, moving out of the capital or, in some of the more extreme cases, declaring themselves insolvent and shutting up shop entirely. For landlords of office space in London, this spells further bad news, but for tenants looking for office space this is fantastic news. With more and more office space in London coming onto the market and less being taken up, empty and unused premises are simply going to cost Landlord's money that, in the present financial climate, they can ill afford to lose. Selling their properties is an unlikely option and, if they do so, it is likely to be at a considerable loss.
For tenants looking to rent office space in London, the news is far better. What was once a market firmly controlled by the landlords, is now a tenant's market, with fantastic opportunities available across the board. In an attempt to court tenants, landlords are trying to ensure that their premises remain unused for as short a time as possible. This means that there has been a sharp drop in rents. According to Commercial Property News, London's rental rates have already taken a cut of around 23% and the figure looks set to increase as the recession bites hard into the banking system and beyond. Coupled with low rents, landlords are also offering substantial rent-free periods. In the West End alone, incentives have tripled in length over the last 12 months.
This current economic situation is offering tenants the opportunity to relocate to more favourable London office space at a fraction of the costs that they would have been facing 6-12 months ago. With the decline in the strength of the pound, London is becoming increasingly popular with international businesses, as it no longer retains the title of the World's Most Expensive Capital, but continues to offer some of the best business links and services across the globe. While these corporations are looking to exploit the downturn and move into top-end London office space for reduced rates, it also leaves the door open for smaller, home-grown businesses to take advantage of the stagnancy of the small and mid-scale markets. Whilst the credit crunch is spelling disaster for many institutions, prospective tenants are seeing a landscape of financial opportunity.
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Shivani Gurtu-Louth
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London Office Space To Rent
If the worrying predictions of climate scientists are correct, London will be severely affected if measures are not taken imminently to address the threat of global climate change. Whole swathes of the city could be submerged by 2050 if forecasted sea-level rises are accurate. The lush green expanse of Hyde Park could more resemble the dry, dusty plains of sub-Saharan Africa. Every individual, family and organisation needs to play their part; including companies whose trade is to supply the city's offices with the products they need to operate.
There are clear indications that some of London's office suppliers are taking their environmental responsibilities seriously. The changes in attitude are partly being led by industry leaders, but also by their customers who, for a number of reasons, expect the trade to help them achieve their environmental objectives. The image-conscious industries of London including advertisers and marketing consultants are keen to show potential clients their green credentials to help win business. Charitable organisations consider their responsibilities to the environment an integral part of a broader moral purpose. Generally speaking, there is a growing awareness by London's companies of the connection between their activities and the potential consequences outlined earlier in this article.
There is a huge business potential in the supply of green office products. A swarm of online retailers who offer a range of everyday products that are green in varying degrees has emerged to capitalise on the demand. These companies are very keen to trumpet their virtues, but are not so willing to acknowledge that their goods tend to be delivered in diesel transit vans that spew out carbon emissions to and from their destinations. In the office supply trade product-sourcing and delivery make the largest contribution to a company's carbon footprint. If London's offices want the goods they buy to be greener, they need to look beyond what their products are made from and examine the broader implications of production and delivery.
More established office suppliers are gradually making important changes to their businesses to address environmental concerns. If your company's trade is to supply office products, van deliveries are a necessity, not an option. Companies that run their own fleet of vans, such as my own employer, are better positioned to reduce their carbon footprint. RED BOX, whose large and varied customer base is located within Greater London, once prided itself on the same-day delivery service that it could provide. The company now actively encourages its customers to opt for next-day delivery. The streamlined delivery schedule reduces the number of split deliveries, but still provides the level of service that demanding London companies expect. It also enables the company to reduce costs that can be passed onto the customer in the form of savings.
Green alternatives to commonly-bought products are also being introduced by established office suppliers. Last year, 34% of RED BOX customers bought green products; now the figure is closer to 40%. In 2006, the average spend on green products was 5.6%. As customers are being made aware of green ranges and in some cases demanding them, the figure has risen to 6.3%. Unfortunately many products used mainly by creative companies do not have green alternatives, but there are indications that this situation is changing. Xyron systems present a viable alternative to spray adhesive. The machines apply a sticky layer to materials but do not contaminate the air or emit the CFCs that destroy the fragile ozone layer. Many products may not be particularly environmentally-friendly, but there are plenty of initiatives that can be taken to limit waste. Many types of toners can be recycled for instance. Instead of plastic packaging, reusable cardboard delivery boxes can be used instead. When the customer is finished with them, the boxes can be returned when the delivery driver makes the next delivery.
Alongside the office suppliers who are making genuine efforts to change their businesses to meet these aspirations, there are others that are, perhaps cynically, using green language and hollow gestures to present an image of environmental virtue. There are signs that green window dressing is no longer good enough to win the custom of environmentally-conscious customers. An increasingly well informed customer is emerging who is prepared to challenge the claims made by companies in the industry. My employer recently had a customer who felt our use of plastic packaging to deliver her goods contradicted our ethics that we so proudly display on our website. All her company's orders are now delivered in the distinctive red reusable delivery boxes. For unscrupulous customers, the shallow claims made by some office suppliers are enough to satisfy their green aspirations. The office suppliers who have a genuine interest in reducing their carbon footprint will have to work hard to help inform customers and potential customers about what they truly need to do to be green. At one end of the spectrum, RED BOX has a customer who spends around 26% of their stationery budget on green products, but there are companies of a similar size and budget who spend as little as 3.6% or lower.
For many office suppliers, the logical conclusion of efforts to become greener is to reach carbon-neutrality and in turn sustainable growth. Almost all human activity in some way generates a degree of carbon emissions. In the case of office suppliers, the greatest carbon-burden is released through the sourcing of products. Office product manufacturers are under pressure to produce their goods in countries with low labour costs such as China and parts of Eastern Europe to remain competitive. Unfortunately, the products have to travel a considerable distance to reach their markets in places such as London with the emissions that this movement produces trailing behind. Once the products arrive in places like the UK, they are distributed to distribution centres and then onto suppliers, sometimes through wholesalers on the way – these journeys also accumulate carbon. Addressing the issue of sourcing presents the greatest challenge to the industry. Drastic measures to reduce the carbon footprint will not make a company completely carbon-neutral. It's inevitable that commercial enterprises will generate some carbon. Initiatives such as carbon-offsetting and carbon-capture schemes can help to compensate for this. In short there is plenty still to do.
Both Shivani Gurtu-louth & Robert Griffith are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Shivani Gurtu-louth has sinced written about articles on various topics from Office Space, Property Agents and Property Investment. Shivani Gurtu-Louth - Operations Manager of Devono Property Limited. Devono are the only commercial estate agents in London to exclusively represent tenants looking for
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