i2office CEO Philip Grace explains how the market is likely to change over the next few years and the impact technology will have for the client of tomorrow.
Serviced offices are experiencing exceptional growth and they are likely to continue for the next 2 years. I2office CEO Philip Grace explains. Serviced Office will see an increase in demand over the next 2 years, companies who need office accommodation will be less inclined to take traditional leases in the face of uncertainty. Serviced Office gives certainty of cost and limits exposure to property.Whilst demand increases what makes some companies stand out from the rest? Is it simply price or are there other factors? The harsh truth is that both price and technology will drive demand. Technology drives businesses of today into the forefront of potential clients. This in today’s modern office is an expensive commodity to run, its not just a case of housing and running a server, the back up support and infrastructure are all costs that can be reduced in the modern serviced office. Technology is second only to location when choosing a serviced office. Unfortunately apart from i2 other serviced office operators lack the vision and or capital to invest in 21st century IT solutions. Mature business centres need significant investment to bring their systems up to date. Faced with reduced workstation prices and higher fixed costs, together with the unavailability of bank debt existing operators stand to be left behind as new companies such as i2 spearhead the IT sol utions today’s companies need to function.
Currently there are some big names in the sector and as the market changes some of these businesses will expand and continue to reap the rewards but what will happen to the smaller businesses? There will become two types of serviced office company. Firstly those delivering excellence i.e. Regus, MWB and i2, these three are major players delivering cost effective flexible office solutions in high quality buildings nationwide and then other providers, who will struggle to survive. The latter will see limited expansion to their centres, which are located in buildings off pitch and of inferior quality. The will be unable to reinvest money into their portfolios, or to purchase the latest IT solutions and the quality of the environment due to a lack of investment will affect their customers. It is unlikely that Regus and MWB will see expansion over the next 2 years, where as i2, a new, debt free organisation, without the baggage of high fixed costs and relationships with major property institutions will set the standards and pace for a new breed of serviced office. The smaller players will be forced into consolidation with expansion unaffordable as they struggle to reduce their central fixed costs, but remain unable to reduce the fixed charges at individual centres, in a market that has seen a decline in workstation prices.
The serviced office sector is set to expand with a clear divide between the bigger companies and the smaller suppliers, but technology, cost and location will always play a big part in this sectors growth.
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