When computer giant Dell asked its staff where they would prefer to work, the overwhelming response was “in town”. Dell subsequently chose to locate its new office in the centre of Glasgow rather than on one of the Scottish city’s business parks.
With unemployment figures maintaining historically low levels and recruitment a continuing issue for employers, do examples such as this mean business park developers and owners should be worried?
The figures paint a fairly gloomy picture. Vacancy levels across the 282 business parks monitored by agent GVA Grimley might have fallen from a high of 14.8% in June last year to 13.4% in December, but this isn’t down to straightforward take-up. Carl Potter, partner and national head of business parks for Grimley, explains: “Vacancy has fallen because of a lack of speculative development. But it is not all rosy. Lettings have increased slightly because occupiers have reoccupied space that they were previously marketing.”
While the office market generally has been slow, this problem has affected regional city centres less acutely since, because of a dearth of development, their problem is not oversupply of office space but, rather, the lack of it.
Opinions on the benefits of out- of-town locations are changing. One occupier, who wished not to be named, cited a feeling of isolation as a reason for choosing a town-centre office.
An industry insider, who also wished to remain anonymous, adds: “We do market space on business parks, but a lot of occupiers don’t like it because they want access to shops and public transport.”
Two advantages on which out-of-town locations often prided themselves were ease of access and availability of car parking, but even these lose their influence in some locations. Peter Honey, associate director for tenant representation at Jones Lang LaSalle, says: “When there was less congestion on the roads, people didn’t think twice about going to a business park. But now there is more pressure on car parking, occupiers are having to look ever more closely at the benefits of being out of town.”
This isn’t to say that the business park as a location is dead, though. Stuart Mitchell of Illife Holloway & Mitchell in Portsmouth says: “A clean, modern business park with a corporate statement is what is attractive.”
There are also the cost implications. Town-centre offices are often more expensive, and space there is at a premium, which can cause problems when companies want to expand.
Honey is currently advising an occupier on a move from a city-centre location to a business park. “It was partly a question of space,” he explains. “Although the company could stay in town, it wanted to have the flexibility to have headquarters-style space.”
However, the recruitment problem cannot be ignored. And despite there being some feeling in the market that facilities are a “soft” issue when it comes to location decisions, they are part of a wider problem of creating a working environment that is attractive to employees. Urban business parks, such as Chiswick Park in west London and Edinburgh Park on the western edge of the Scottish capital, can help in this regard as they allow occupiers to use local amenities, giving workers some of the benefits.
Potter comments: “The most important factor is being able to recruit staff. When you develop a business park, you have to make sure you do it in an area where occupiers can recruit easily.”
Strutt & Parker is consultant to Arlington, the biggest business park developer in the UK, with nearly 3m sq ft of occupied space in its portfolio. Simon Underhill, head of national office agency at Strutt & Parker, believes that recruitment issues have already shaped office locations.
“Occupiers will go where they can get the right people,” he says. “Some occupiers, during the last cycle, in a very competitive employment climate, were targeting graduates or young people who prefer to live in an urban environment. That was driving a growth in interest in urban locations.”
And this trend is set to continue. Developers such as Arlington are already looking at what they are offering their business park occupiers, and whether there is a need for further improvement. Underhill says that the developer also now recognises that the industry can no longer look at a site in isolation.
Underhill believes that the different elements of a location can feed off each other and add value – for example, having housing nearby for staff, plus health and fitness facilities, retail and leisure.
But one architect has warned that the mindset of the majority will have to change, too. Chris Gregory, associate director and office product coach at REID Architecture, says: “If an occupier is looking in a business park-type environment, they want their own building with their own front door. But they also want amenities around it.
“I wouldn’t be surprised if the token central facility becomes a bigger part of the overall development from the outset. Further away from the cities, there is more pressure on providing other uses.”
There is no doubt that business parks will have to move with the times, and market pressures may force the issue sooner rather than later. As Gregory points out: “The office market has been slow, and it will be interesting to see how things change as it picks up.”
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GVA Grimley monitors 282 of the largest business parks nationally. Availability peaked in June last year at 14.8%. Up till 2001, availability had been roughly 5.5-6% |
