The office market in developed countries has changed and is changing dramatically as new technology trends continue to emerge. The Internet has changed the need for physical office space for many companies, working from home is now more commonplace but interestingly, the online arena does seem to be picking up some of the slack.
Technology and office space
Over the last few weeks we have seen the likes of Amazon expanding into many new areas of business which means the need for new physical warehouses. The expansion of Amazon’s business will also require the need for more traditional office space as the e-commerce world continues to expand. So while technological advances may see some of the more traditional office/retail tenants reducing their exposure, going out of business and looking for cheaper options, perhaps the e-commerce world will fill this void.
If we also look over the pond, we see the creation of a Google village in San Jose which brings along with it office space, residential space and a boost to traditional retail businesses. We’re not talking a small increase in office space more a doubling of the current office space right across downtown San Jose – how will this impact prices in the future San Jose office market? So, while many may suggest that the world of technology is decimating retail and traditional businesses there is still no getting away from the need for physical storage space and office space.
Small business premises
In days gone by the cost of advertising, premises and other setup costs meant that many people with potentially good business ideas were unable to fulfil their ambitions. Thankfully, for many small business entrepreneurs, there has been a radical change in this area and new technology has decimated setup costs. The ability to utilize relatively low-cost advertising across the Internet replaces more expensive traditional advertising methods. This has led to a significant increase in the number of small business office centers in developed and developing countries.
The ability to rent a relatively small office on a relatively flexible lease with an array of services to hand is a godsend for many small business entrepreneurs. As these small business centers service a high number of businesses there is minimal impact on rental income if even a handful of residents were to leave. It is also fair to say that small business operations attract other small business operations and very often it is fairly easy to replace businesses which have vacated the premises.
Moving with the trend
It will be interesting to see whether the U.K.’s exit from Europe prompts an increase or decrease in the number of small business entrepreneurs in the UK. On one hand businesses may potentially lose direct access to the European market but on the other hand the UK government will be free to arrange trade deals around the world. However, whether inside or outside of the European Union there is more than enough potential business to support the growing number of small businesses across the UK.
Pop-up offices, pop-up shops and other short term leasing arrangements will likely become more commonplace in the UK office market as well as premises for business meetings. This is not to say that traditional office/retail tenants will disappear altogether but there is no doubt that the Internet and e-commerce is having a monumental impact upon the UK and other office markets round the world.