Office prices in London are extortionate: it’s believed that office rents there are the highest in Europe, and there’s not much sign of it changing any time soon. With this problem facing many of the companies which hire people in the capital, drastic changes have had to be made. Firms are moving away from the practice of having big, bulky kit in the same room as their desks – and those who can’t avoid doing this are moving out. And it’s also fuelled a boom in service companies like co-working spaces and storage providers, all of whom are racing to meet the needs of cost-conscious businesses.
The rise of co-working
Perhaps the most obvious way in which London’s business world has been transformed is by the arrival of the phenomenon of the co-working space. Co-working spaces are a relatively new development, and they refer to a location that houses a large number of desks which are rented out to a host of different companies. This could mean there’s a firm of architects opposite you, a self-employed researcher next to you, and a customer service office for a major institution downstairs!
It stands in contrast to a typical rented office, in which one organisation dominates all of one floor or even a whole building. For the many organisations out there which don’t have the resources to rent such a space, it’s a real boon. These spaces are often much cheaper than hiring out a whole floor or a whole office, and they’re often more convivial thanks to the diversity and the whole-office social events which are often scheduled. As a result, staff morale can rise.
Increase in self-storage
The rise in London storage options, meanwhile, is also a clear consequence of the rise in office prices. Back in the day, offices were not just spaces for actually executing work they were also a destination for organisations to store large and bulky items. Say a communications firm occasionally produces printed materials for some of its clients: it may have possessed a photocopier or binder for this purpose, and in an age of cheap office rentals that was fine. Now, though, every single square foot of space in an office or workplace environment is valuable – and a space for the most valuable modern asset, human capital, to work is often considered much more important than space for less valuable, rarely-used physical objects.
But a self-storage unit is a way around this problem and it’s now common for organisations to store the sorts of items they only use on an irregular basis in cheap yet safe storage units. In an age in which premium office prices are everywhere in cities such as London, it’s more than likely that there will be a consequent spike in the proliferation and use of self-storage spaces.
London has always been home to a wide variety of business types – but the change in the value of space has had a knock-on effect on what sorts of firms are able to access offices. As alluded to above, businesses which rely on heavy tools are less likely to set up in central London. It’s no coincidence that areas with lots of land, such as Home Counties like Essex and Kent, are now home to thriving businesses in sectors such as logistics which need a lot of space. In the high density world of London commercial space, people and desks are about all that can fit. It’s now very common to see equipment-light sectors such as PR, accountancy and more dominating the office space that is available.
And it’s also worth noting that sectors which never used offices to begin with are also suffering as a result of the changes in price of all varieties of space. Take restaurants: in an era where commercial space was cheap, setting up an experimental new restaurant was considered a relatively affordable, if uncertain, endeavour. But in this age of high prices, aspiring restaurateurs are now far more likely to consider a food truck or a pop-up as a way of mitigating the high costs of London rents and rates.
There’s no doubting it: London’s business scene has changed irrevocably in recent years and part of the reason why this has happened is that office prices have skyrocketed. This has had all sorts of consequences: from a change in the business sectors which operate in London to the rise in self-storage and co-working, it’s clear that high office prices have sent shockwaves through London commerce.