Landlords No Longer Considered Inflexible

New Survey of Office Occupiers by Irwin Mitchell Reveals Changing Attitudes to Property Needs

07.11.2014

Karen Roberts, Press Officer | 0207 400 8714

Landlords no longer appear to be as difficult or inflexible as traditionally thought, according to senior decision makers in a new survey investigating business property needs.  The survey, commissioned by law firm Irwin Mitchell, found that of the 250 companies researched, 180 of them, or 72%, consider that landlords offer sufficient flexibility to occupiers, with only 17.6% saying they do not.  Of those who said not, 27% said they would like landlords to offer more flexible lease break options, followed by lower or capped service charges (14%) and shorter lease terms (14%).
 
The survey, which questioned companies across the UK with employee numbers ranging from 200 to over 6,000, also found that location remains the most important factor for businesses when choosing premises, with 69% rating this first. This was followed by premises’ cost (15.8%), workforce accessibility (8.4%) and then transport links (3.7%).  Of all the factors, energy efficiency was least important, with no businesses classing it as a top priority.  This might indicate that environmental issues still remain low on the agenda for businesses, a response reflected in Irwin Mitchell’s earlier snap shot survey of London occupiers last month.
 
Whilst 80% of businesses said they intend to stay in the same premises in the next 12 months, 16.8% plan to relocate or take on more space. Almost all of these plan to remain in the same region of the UK, (nearly 92%).  In terms of the most attractive business locations, London is the most popular with almost 72% of the vote, followed by the Midlands and North East, with just over 8% each, so pressure on supply in the capital looks unlikely to slow down.
 
The survey also asked about attitudes to online working practices with 43% considering that this will result in businesses requiring less office space in the future, and 40% thought requirements would stay the same.  Interestingly, only a very small percentage of those surveyed, 2.4%, had said they personally plan to reduce their premises requirements in the next 12 months, indicating this may be a longer term trend.
 
Irwin Mitchell also canvassed attitudes to the planning system. Although 56% of those surveyed said they are unlikely to or will not need to engage with their local planning authority in the next twelve months, nearly a quarter, 23.6%, said it was likely or highly likely that they will do so, a promising indicator of potential development activity. When asked which of the recent changes to the planning system they considered the most helpful, the expansion of permitted development rights received the most votes, indicating that this element of  the Government’s planning reforms designed to stimulate development has been well received by the business sector.  However, local authorities have not been so welcoming of these reforms, partly given the significant difference in fees between a full planning application and those for prior approval under the new regime. If a substantial number of those who said they will be engaging with planners will be seeking prior approval under permitted development rights, local authorities may well be under some resourcing pressure over the coming months.
 
Irwin Mitchell also asked about energy efficiency. Interestingly, although this was the least important factor in choosing premises, almost 82% of businesses said they think improving energy efficiency has benefitted  or will benefit their business. However, occupiers were realistic about who should address this. Surprisingly, the majority of those surveyed do not just consider energy efficiency is landlords’ responsibility, and 68% saying it should be the joint responsibility of landlords and tenants.

Expert Opinion
It is interesting that the attitude to landlords seems to be changing, with businesses feeling landlords are more flexible and accommodating than in the past. Perhaps this is a function of the market in the last few years, whereby landlords have had to improve their offer to attract the best tenants in difficult markets”.
Paul Firth, Partner