What’s the shape of things to come? It’s a key question for growth-oriented operators and stakeholders within the flexible workspace industry. Indeed, it’s the overriding theme of this year’s BCA Conference and one that a string of expert speakers, including CBRE analysts and renowned economist Justin Urquhart-Stewart, will strive to answer.
But is it really a question that can be accurately answered?
On that front, the answer is... not really. Forecasts will always be chained to the unpredictability of chance, which can make even the best-laid growth plans challenging to execute. It also means, however, that unexpected opportunities can come knocking at any moment.
In lieu of crystal balls, what we can do is study some of the factors that shape and influence our sector. Often, our sector mirrors the twists and turns of the economy and it is useful to keep a sharp eye on economic developments - not to mention potential opportunities or pitfalls - in order to gain a glimpse into how demand for flexible space may fare over the coming months.
Alpesh Paleja, Principal Economist at the CBI (Confederation of British Industry), penned an interesting article on the current state of the UK economy. He explains:
“The answer is best summed up by a quote from MPC member Michael Saunders: it’s “not great, but nor is it terrible”. Economic momentum slowed notably in 2017 – with average quarterly growth (at 0.3%) halving compared to the last few years – but it could be worse.
In fact, the economy has evolved pretty much as we had expected: growth has been bang in line with our forecast and at the Spring Statement a few weeks ago, the Office for Budget Responsibility revised up their own forecasts in line with our current numbers.”
For businesses, the big road block is Brexit. Paleja claims that uncertainty around Brexit remains high, which is holding back larger investment projects and capital spending plans.
However, Paleja notes that business investment on a smaller scale “has actually held up quite well since the referendum”, having grown by 2%. Much of this reflects projects and innovations around streamlining and boosting operational processes.
The bottom line is that Brexit is having an impact on business. Why wouldn’t it? But again, opportunities exist even in the face of economic turbulence. In our sector’s case, flexible workspace operators continue to cite growth in demand and take-up from organisations reluctant to take on long-term office leases.
Length of Office Terms Shortens
Case in point, the latest Citibase Business Confidence Index for Q1 2018 (as published in Property Week 06/04/18), which surveyed 1,059 SME decision-makers, revealed that the current political climate had led these SMEs to review their workspace requirements. 72% stated they were now seeking terms of less than three years, compared with 57% in Q1 2017.
The second and third most important workspace requirements for Citibase’s respondents are flexible short-term contracts (42%) and the ability to easily change their size of space (41%).
Interestingly, the top most important requirement is high-speed Internet connectivity. This out-ranks the need for workspace flexibility and demonstrates the sheer importance of good quality connectivity in today’s workspace environments.
It’s also worth noting that Citibase’s survey found that SMEs do not value lifestyle elements such as leisure spaces or on-site bars. These are considered “costly extras” that detract from their current pressing need for functional, well-connected, flexible space.
Back to Paleja’s review of the current state of the economy, and his analysis ties in with Citibase’s observations on good quality connectivity and the positive impact it has on occupants. Despite a number of high-profile campaigns to raise awareness of digital skills shortages, Paleja notes that “citations of skill shortages remain high across our surveys”, which is leading UK businesses to seek technological innovations, such as automation, to cut time-consuming tasks and boost productivity.
“As a result [of labour and digital skills shortages], businesses are turning to innovative ways to get the job done – focusing on re-training and upskilling their workforce, but also looking at investment in robotics, artificial intelligence and automation.”
Labour shortages are amplified by the Brexit affect and the low pound, which is leading some skilled EU migrants to return home.
However, our industry - including the technical firms that supply it - is working to meet these needs and close the skills shortage gaps. For instance, BCA Partner, Communicate Technology PLC, an IT and telecoms specialist for multi-occupancy commercial properties, has just been named in the top 1000 list for Europe’s fastest growing companies by the Financial Times.
This is one example of how companies are facing forward and as Paleja notes, “very much keeping an eye on the future, mindful of capturing the opportunities that lie beyond Brexit.”
The UK is a hive of innovative small and medium-sized businesses that are fuelling the economy and moreover, have the potential - with the right support and skills training - to power economic growth through Brexit. It is our sector’s job to meet these needs by providing functional, flexible and highly connected environments to nurture small and medium-sized businesses, which in turn will help to assist job creation as the UK steers a new course outside of the EU.
Discover the opportunities that lie ahead at BCA Conference 2018, where we’ll be discussing all of these topics and more. Hear from small business expert Emma Jones MBE, learn about building connectivity with WiredScore, and understand the current state of the economy with Justin Urquhart-Stewart. At BCA Conference, nothing is off the table. Reserve your place here.