FOCUS SERVICED OFFICES
PROPERTY
What does the new year have in store for the corporate real
estate market? John Spencer, CEO of Landmark, predicts a
strategic shift in favour of shorter leases and fl exibility
According to the annual Knight Frank
global occupier report published
at the end of last year, real estate is
more than ever a strategic device for
businesses. The report, which is compiled
following interviews with over 100 global
corporate real estate leaders, predicts
that flexibility will become an even more
significant driver in real estate choices.
This comes at a time when many leases
are expiring in the UK, when Brexit continues
to create uncertainty, and new accounting
standards mean greater scrutiny of balance
sheets as leases are recorded as assets and
liabilities. For anyone not familiar with the
International Financial Reporting Standards
(IFRS), they came into force in January 2018
and mean that UK businesses e€ ectively
have to add £200 billion of liabilities to their
balance sheets. Businesses with multiple
o€ ices will be particularly a€ ected, financial
stability may be more openly questioned,
and credit ratings could be a€ ected.
One result is that long leases are going to
be viewed far less favourably. Occupiers will
be reluctant to commit to too much over
40 FEBRUARY 2019
an extended period, and will be attracted
by real estate solutions o€ ering agility and
flexibility.
There is already evidence of this. Savills
reported an increase in serviced o€ ice takeup
of 150 per cent in the UK in 2017. Late
last year, JLL predicted that flexible working
space will grow by up to 30 per cent annually
to meet the rising demand for flexible
workspace. In the last year, Landmark has
increased its footprint to one million square
feet across London’s West End and City as
well as in Manchester and Birmingham.
We have taken entire buildings as well
as individual floors, and will continue to
expand. Our rivals are doing the same.
This increase in supply will continue to
serve large corporates, which use it for
projects and overspill but also to add to
the variety of the space available to sta€ .
Start-ups and SMEs will also continue to be
attracted to serviced o€ ice space, and we
anticipate that European firms may take
some too, especially in London, ensuring
they have a UK hub as Brexit looms.
Alongside flexibility, another key