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British businesses are more concerned about the impact of a cyber-attack than they are about Brexit.
This was one of the surprising results from Property Trends In 2018, the survey of office occupiers undertaken by national law firm Irwin Mitchell. The responses of 165 senior decision-makers across the UK revealed that nearly one fifth of them felt the possibility of a cyber-attack was the greatest threat to the success of their business going forward, compared to 14% who said Brexit and 13% who named regulation.
Indeed, two thirds of businesses said that the thought of Brexit had not impacted on their business decision making, only slightly less than at the vote nearly two years ago. Only 11% of businesses said Brexit had impacted them a lot, and a further 22% a little. Those who stated worries named importing and exporting, currency fluctuations, employment issues and costs as their main concerns, with a general caution about political and economic uncertainty ahead.
The cautious but not unoptimistic approach to business success was reflected in businesses’ attitudes to rents, with 65% of occupiers thinking rents will go up in the next 12 months and only 3% thinking they will go down.
This positive caution was also seen in their attitudes to their space requirements. Although the vast majority of respondents (89%) said they plan to stay in the same premises for the next 12 months, of those who planned a change, 65% said this was to take on more space, with most of those saying this was because they were growing organically. This year, those companies who said they were relocating all said they planned to stay in the same area of the country, with none planning to move abroad – good news for those fearing a mass exodus post-Brexit.
In terms of location, London and the South East topped the poll as the most attractive place to be for business, scoring 32% of the vote up from 27% in Spring 2016. But there was a growth in companies choosing the Midlands – 16% of the poll, on a par now with the North West and North East, perhaps reflecting the confidence inspired by HSBC’s move to Birmingham and the progress of HS2.
Ben Acheson, partner and real estate expert at Irwin Mitchell, said:
Expert Opinion“Occupiers see the Midlands as an attractive place to be, with quick links to the capital but at much reduced costs.” Ben Acheson - Partner
36% of our survey also said that the type of space most attractive to them was near strategic transport hubs, much more important this year than being in city centres, perhaps reflecting the success of schemes such as Paddington Basin. Being in a growth area or hub for their type of business also scored highly (39%). Businesses seem to be recognising that certain areas are synonymous with certain types of businesses, such as the tech community in Shoreditch.
Our 2018 survey also highlighted how attracting and retaining staff appears to have become a bigger issue for businesses. 34% said they chose the space they did to attract and retain the right workforce. When asked about which working practices they would consider implementing, the most popular (28%) of the survey was offering staff flexible working patterns, such as allowing employees to work off-site or at different times of the day (for example to avoid rush hour). Close behind (21%) was recognising the need to provide recreational areas for staff.
When asked why businesses now thought this way, 50% of the total said it was to accommodate a growing workforce and to keep and retain such staff by listening to their demands.
Melanie Stancliffe, partner and employment expert at Irwin Mitchell, said:
Expert Opinion“When employers are battling to retain and recruit staff, a stylish environment is a selling point. Agile working, light spacious offices, space to decompress and communal areas are vital attractions in a market where employees now have a choice.” Melanie Stancliffe - Partner
In particular, companies are keen to keep hold of their younger workers, especially the millennials. Over 55% of businesses said they wanted to attract and retain both millennials (a person reaching adulthood in the early 21st century) and twilighters (older workers), but keeping millennials was the next most important – 40% of respondents, compared to only 5% saying it was a priority to retain twilighters. That said, several companies said they offered equal opportunities for any age and that the most important factor was getting the right person for the right job.
Finally, we asked about attitudes to sharing building space. Although 67% of businesses felt using serviced office space would not be right for their businesses, over 32% of businesses have either considered or would consider using this type of space going forward. Similarly, in terms of co-working practices (sharing offices with other companies on a flexible basis to reduce costs and promote networking), 26% of companies said they have considered this or are considering co-working practices going forward, showing this is a trend that won’t go away.
Commenting on this year’s survey, Adrian Barlow, partner and national head of real estate at Irwin Mitchell, said:
Expert Opinion“Business occupiers appear to be cautiously positive at the moment, with most businesses staying put and making the most of existing space to full advantage. There is a stronger belief that rents are on their way up, leading to some occupiers considering more flexible office accommodation, so they are not so beholden to landlords on long upward-only leases.
“Brexit appears to be more of a background noise than a major disturbance, with more people concerned about the risk of a cyber-attack on their businesses and how they attract and keep the right staff.”
Adrian Barlow - Partner