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Press AreaCost-cutters push Regus profits higher by 25% Regus, the serviced office operator, reported a 25 per cent increase in full-year profits yesterday as businesses sought to cut costs by renting work space.Mark Dixon, the chief executive, said that, although the global economic background had become more difficult, his group's newly introduced portfolio of “recession-busting” products was attracting customers. The company has seen strong growth in its Business World programme — a global pay-as-you-go card for people without a permanent office — as the number of mobile workers increases. FTSE 100 companies are among users of the service. Other offerings include a hot-desking service and virtual offices. Regus charges from £100 a month for a workstation, claiming to save users as much as 80 per cent when compared with a traditional office. Mr Dixon, a former hotdog seller who founded Regus in 1989 to sell short-term office space out of a building in Brussels, said larger companies were becoming more comfortable with using serviced offices instead of their own buildings to cut costs during the recession. It is a change that Mr Dixon believes is here to stay. He added that customers were also using rented office space more to help with expansion into new markets without increasing fixed costs. Pre-tax profits for the 12 months to December 31 rose to £149.2 million, up from £119.4 million the previous year. The total number of workstations increased globally by 10.3 per cent last year to 171,277. International occupancy rates rose 0.2 percentage points to 82.9 per cent. In the UK, where the group operates 131 centres with 30,899 workstations, sales grew by 6.7 per cent to £222.1 million, with flat occupancy rates of 84 per cent. ------------------------------------------------------------------------------------------- From The Times March 12, 2009 London woos foreign firms with rent-free office for year Catherine Boyle Boris Johnson, the Mayor of London, yesterday sought to tempt foreign businesses to the capital by offering companies up to a year without rent. Speaking at Mipim, the European property industry’s annual conference in Cannes, Mr Johnson tried to lure businesses to London with a range of incentives, including up to 12 months’ free office space and the use of a dedicated adviser to help them to establish an operation in the capital. Think London, an agency set up to attract foreign investment to the capital, will introduce potential clients to Avanta, a serviced office agency. The free rent, to the value of £150,000, is funded by Avanta, in the hope that clients will stay on after the offer period expires. ------------------------------------------------------------------------------------------- Dixon to launch £10m start-up initiatitive offering free offices 26.01.09 British companies must do more to assist each other during the recession, according to a multi-millionaire entrepreneur who will tomorrow launch a £10m initiative to support people trying to set up businesses. Mark Dixon, the chief executive and founder of office provider Regus, will provide free office space as well as advice to those looking to establish businesses in what is already the country's deepest recession since Margaret Thatcher's early years in Downing Street. 'We're in something more serious than a recession: it's very fast and global,' said Mr Dixon.'We need a war-time spirit and companies need to get together and be counted.' The Government this month announced plans to guarantee more than £20bn of bank loans to small and mid-tier companies, which employ about 13.5 million people in the UK. Although that plan received a cautious welcome from business groups, Mr Dixon who started his career running a sandwich delivery business in Chelmsford, Essex, in 1976 argues that it is critical to continue to start new businesses in the teeth of the downturn. Sunday Telegraph ------------------------------------------------------------------------------------------- Small firms seek flexi-space 12/08/2008 09:00 Almost two thirds of companies still working from fixed business premises are considering giving them up within the year, research from O2 shows. Regus chief executive Mark Dixon, commenting on the findings, said businesses wanted more flexible accommodation. Dixon said about two thirds of the serviced office supplier's 400,000 clients no longer had permanent offices compared with about 5% a decade ago. 12/08/08 Times 43 Daily Telegraph B8 The Times | Daily Telegraph ------------------------------------------------------------------------------------------- 13-12-08 Estates Gazette Cost-cutting corporates boost Regus Paul Norman 13/12/2008 00:00 The financial crisis has enabled serviced office provider Regus to increase sales of its global home and virtual working packages by 25%. Founder and chief executive Mark Dixon said that the group now had around 180,000 office workers signed up to its Business World cards package - which offers people access to Regus's serviced offices for £20 per person per day. Businesses that have signed up for the cards include KPMG, GE Capital, Google, HSBC and Motorola. Dixon said that demand for the cards had risen as businesses attempted to slash costs across their office estates. He claimed that the system can reduce staffing costs by around 80%. "There is no doubt that these are very challenging times," said Dixon. "People are turning more and more to these more flexible solutions to sustain our business as more conventional office solutions struggle." He added that Regus was also in negotiations with a number of other large corporate entities that are proposing to take more than 1,000 cards each. -------------------------------------------------------------------------------------------------------------------------------------------------------------------- By Mark Shepherd Serviced office providers are seeking to exploit the credit crunch. The growing spectre of recession in the US may have caused developers and investors in the UK to abandon their expansion plans, but it has had the opposite effect on serviced office providers. Instead they are trawling for office space in the City of London and Canary Wharf in anticipation that the US banks and other financial services occupiers will shed jobs over the next six months and need short-term accommodation until the downturn subsides. In April Abbey Business Centres is due to open 28,000 sq ft of serviced offices on the 37th floor of One Canada Square at Canary Wharf. This is in addition to 28,000 sq ft it has at the Swiss Re Tower at 30 St Mary Axe. It has followed the example of MWB Business Exchange, which has opened 34,322 sq ft at 55 Old Broad Street and 18,500 sq ft at City Tower. Regus has also confirmed it has been approached by financial services occupiers in the City that want to trim surplus office space in the months ahead. Scaled back "There are a lot of serviced office providers who are positioning themselves to try to take advantage of what has been happening in the US over the last few months" says Julie Calder, managing director of Abbey Business Centres, which now has 13 centres across the UK and 4,000 workstations. Calder says financial occupiers are more willing to consider alternatives to traditional leases in the City and Docklands now that their market is racked with uncertainty. The Centre for Economic Business Research predicts that the City will shed 8,000 jobs this year. "For corporates, it is something they are beginning to look at because of all the volatility in the world's financial markets," says Calder. They do not know whether they are going to need to lay people off and when, or if, they will be able to expand again. As a result, they are shying away from the traditional long leases and looking instead for short-term leases with more flexibility. They are looking for space that they can walk away from if they have to." Occupiers confirm this. Accountancy firm PricewaterhouseCoopers says it expects to be targeting short-term office accommodation over the next year. It is moving 6,000 staff to More London in 2010 for its main operation, but says that serviced office accommodation is rising up the agenda to accommodate its subsidiary offices. Paul Harrington, PWC's real estate director, says that serviced office providers have begun to tailor their services towards traditional corporate occupiers who until now have only ever considered long-term leases. But since the beginning of the credit crunch in August, many of those occupiers have had to reconsider their position. "There is a real opportunity here for those serviced office providers who can prove to corporate occupiers that they can provide as good accommodation as some of the smaller landlords out there," says Harrington. "They could even start to challenge some of these landlords if they play their cards right." Harrington says that for the last year PWC has been leaning towards the use of serviced offices for many of its subsidiary businesses. They could even start to challenge some of these landlords if they play their cards right Julie Calder, Abbey Business Centres "Quite often it is better to go for a two- or three-year lease while you test the water to see whether a certain enterprise is going to work. Then when you have built up that base, you may then later look to a more long-term arrangement." Short-term accommodation He adds that corporate occupiers are now moving further towards the concept of a balance between long-term leases and short-term accommodation. "They don't want to find themselves in a position where they have taken a long let of 70,000 sq ft and then do not need 20,000 sq ft of it, but because of worsening market conditions, they cannot shift it," says Harrington. "When faced with that kind of proposition, serviced offices begin to look more attractive before because then the space is a lot easier to walk away from." MWB Business Exchange, which has a portfolio of 57 centres and 15,500 workstations, says it is targeting corporate occupiers that may need to make drastic staff cuts over the next six months and may have to rein back their office requirements. "The US occupiers operating in London are facing a very uncertain time," says John Spencer, chief executive of Business Exchange. "Either they are already over here and they have to consider whether they need as much office space as they have got now, or they were considering coming over to London and are having to think about downsizing their plans." In a bid to make serviced offices a more attractive proposition to occupiers generally addicted to long-term leases, MWB has decided to "debrand" its premises. Its new centre at Old Broad Street does not include any MWB livery and its staff all wear plain black uniforms. "It is not a case of a particular corporate not wanting to be seen in a serviced office," says Spencer. "It is more that they want to be seen in their own premises. That image is very important to them, so we have made the centres less about us." Eye of the storm Peter Cookson, managing director of corporate outsourcing at Regus, says there are striking similarities between now and the internet crash in 2001. During that period, technology companies that had taken space, particularly in Thames Valley, were hit hard. This time it is the financial services sector that is in the eye of the storm, but Regus expects the impact to be the same. "In 2001 you had all these technology companies who suddenly had a lot of space on their hands that they didn't need," says Cookson. "What we did then and what we are doing now is talking to these companies to see if we can let their space to our clients. It is fair to say we have been getting a lot of enquiries from corporate occupiers who need to scale back their space in the City." The key to success for serviced office providers will be to provide nomadic occupiers with the standard of accommodation to which they have become accustomed. "It will all come down to whether the people who decide to use the serviced office route during this period think it is a viable alternative," says Harrington. "Whether it be Regus or MWB or whoever, they have it all to play for at the moment." -------------------------------------------------------------------------------------------------------------------------------------------------------------------- 14-03-08 Property Week SMEs to benefit as credit crunch prompts serviced office surge. Mark Shepherd reports The growing spectre of recession in the US may have caused developers and investors in the UK to abandon their expansion plans, but it has had the opposite effect on serviced office providers. Instead, they are trawling for office space in the City of London and Canary Wharf in anticipation that the US banks and other financial services occupiers will shed jobs over the next six months and need short-term accommodation until the downturn subsides. In April, Abbey Business Centres is due to open 28,000 sq ft of serviced offices on floor 37 of One Canada Square at Canary Wharf. This is in addition to 28,000 sq ft it has at the Swiss Re Tower at 30 St Mary Axe. It has followed the example of MWB Business Exchange, which has opened 34,322 sq ft at 55 Old Broad Street and 18,500 sq ft at City Tower. Regus has also confirmed it has been approached by financial services occupiers in the City that want to trim surplus office space in the months ahead. Take advantage For small and medium-sized firms, the growth in this sector since the credit crunch means there now is a wider choice of serviced office space to occupy than ever before. There are a lot of serviced-office providers who are positioning themselves to try to take advantage of what has been happening in the US over the last few months,� says Julie Calder, managing director of Abbey Business Centres, which now has 13 centres across the UK and 4,000 workstations. Financial occupiers are driving this demand because they want more flexible space amid financial uncertainty. -------------------------------------------------------------------------------------------------------------------------------------------------------------------- Property Week- 14-03-08 Managed business space: the office sector's eco warriors 14.03.08 By David Lawson David Lawson examines how serviced offices are doing their bit for the environment After years of denial, property has gone crackers about sustainable development. The sheer number of conferences, seminars, newsletters, codes and puffy declarations about the industry's Green credentials is mind-numbing. Yet the same old doubt bubbles beneath the surface: who will pay for all these world-saving extras? Not the tenants. There is still negligible evidence that green buildings merit premium rents. Managed space operators have no such qualms. All-in fees mean they foot bills for energy and tougher waste disposal rules, so they should be leading the charge into a sustainable future. Some big names are in the front line, and the smaller ones will need to catch up. Tom Stokes, who will spend the next year banging this drum as new chair of the Business Centre Association, says poorly rated centres will face lower rents and falling values as a two-tier market emerges, particularly with the introduction of energy performance certificates. "It is in our interest to go green," says David Alberto, managing director of Avanta. "Utility bills have soared from £1.25/sq ft to £2.50/sq ft since the 1990s, and we'll bear the brunt of the carbon taxes that are in the pipeline." Taken on trust Alberto called in the Carbon Trust to produce action plans 18 months ago, but he is looking beyond energy saving. Tenants are already demanding evidence of waste management, so all Avanta centres recycle plastic and paper. Stokes is also working with the trust in his day job as managing director of Evans Easyspace, and new developments are being built to above BREEAM standards. But he sees a wider role than just cost saving. "Top tenants are demanding greener buildings, but the industry has a responsibility to also give a lead to smaller businesses that do not yet know how to fully embrace green issues," he says. "This should be seen as an additional service, with advice on key issues such as carbon footprint reduction, recycling and green transport." Yet it is likely to be pound signs rather than good intentions that interest operators caught between soaring utility bills and tenants that are reluctant to fork out higher fees. MWB Business Exchange chief executive John Spencer has shown that the dilemma can be easily resolved. He has saved £100,000 – around 5% of costs in the first year of a campaign to "green" the firm's portfolio. This has relied heavily on simple techniques such as persuading tenants and cleaners to turn off unused lights. This will be less necessary in new and refurbished centres, which will have motion detectors, high efficiency heating and ventilation, and designs maximising daylight. -------------------------------------------------------------------------------------------------------------------------------------------------------------------- Saturday Times 17-03-08 Regus is positioning itself to profit from a downturn in corporate occupier demand for traditional leased office space after a strong advance in annual profits. Financial Times (Saturday) The office outsourcer saw a 54% jump in pre-tax profits to £119.4m in 2007 on a 26.8% rise in revenue to £862.4m. Regus does not own any property but instead operates serviced offices in buildings and homes through joint ventures, franchises and managed offices deals. The company grew the number of centres by more than 20% last year and now operates across 70 countries. Mark Dixon, Regus chief executive, said the office occupier market would come under pressure in the next two years owing to problems in the economy but the company's business would benefit as companies looked to cut costs. -------------------------------------------------------------------------------------------------------------------------------------------------------------------- The Serviced Office Market Serviced Offices The thought of not knowing how a business will contract or expand over the next seven years makes the concept of flexible space or serviced offices more appealing. This is further compounded when considering the differences in moving-in costs between serviced offices and leased. These issues include: installing communications lines and internet connections, furniture, legal fees, dilapidation costs, full repairing and insuring leases, service charge bills which can continue after the office has been vacated. UK market So what is happening in the UK market right now? We can only tell by the availability figures that we are given by the centres and the amount and type of business that we are doing. Firstly the occupancy levels - these are currently at 77% on average across the whole of central London - this is down slightly as a handful of very large units are currently vacant and influencing the average figures. Several business centres are full. Workstation rates have generally increased. Secondly, in terms of our business the total number of serviced office enquiries we generate has gone down by almost 5% - comparing the last 6 months with the same period last year. Our overall conversion rate has also dropped by almost 10% but the amount of space sold has increased due to a handful of larger deals. The nature of demand has polarised over the same period with a relatively healthy demand from the SME's seeking small offices (<5 people) together with a strong demand from Government-related teams for large units (>3,000 square foot). In our view, the demand for large units from the corporate sectors has also begun to increase over the past 3 months or so albeit from a low base. Managed offices save money, says reportSMEs stand to gain from greater flexibility24.03.2006 By Sean McAllister Small and medium-sized office occupiers could save themselves millions of pounds in property costs by moving to managed business space rather than taking a lease on an office building. So says a new report, Organising the Workplace for Profit: Profit Options for SMEs, which outlines ways in which small and medium-sized enterprises (SMEs) can make operational savings, improve staff retention and productivity and increase competitiveness by handling their property better. The report is written by Rob Harris, director of Ramidus Consulting, which gives office occupiers advice on property. It is made up of a series of studies, the first of which is to be launched next month, accompanied by a website, www.workplaceperformance.net, and workshops in May and June. ‘Managed and serviced offices can be attractive for SMEs, which have unpredictable or rapidly changing short-term space requirements to accommodate projects, mergers or expansion,' says Harris. ‘They also suit start-ups where growth profiles are uncertain,' he continues. ‘Managed offices allow SMEs to reduce their exposure to property and achieve flexibility through a simple occupational contract,' Harris adds. The report includes an example of a Manchester-based company that saved £1.85m over three years by choosing managed business space instead of a traditional lease. ‘It has always been the perception that serviced or managed business office space is more expensive,' says Tim Worboys, sales manager of managed office provider Stonemartin. ‘What occupiers don't often understand is that they can make a 15%-25% saving on the space they require because breakout space, kitchens and so on are all provided by the centre. ‘And you need to factor in the total cost of occupying an office. Reception staff, cleaning and depreciation of furniture are all examples of the various costs that are included within a managed business space contract but not within a lease agreement.' According to Worboys, managed business space also gives SMEs more flexibility, particularly if the provider offers occupiers a ‘just in time' service for changing space requirements. Managed offices that can provide contiguous space for growing companies provide the best option for occupiers and the greatest savings, he says. Managed office provider Stonemartin recently helped find office space for a company based in Manchester while it expands over a 30-month period. The company’s requirement was for 27,986 sq ft (2,600 sq m), so it could eventually house up to 223 people. Under the agreement with Stonemartin, it moved into the Peterhouse offices, initially accommodating 74 staff, but with the option of taking up adjoining office space as and when the company built up to its anticipated staffing levels. The company saved money by not renting unwanted space in the first year and by using the IT and facilities included in the deal. Compared with conventional office space costs, Stonemartin estimates the managed option saved the company £1.27m in the first year, £476,000 in the second, and £106,000 in the third. The overall cost saving was put at 46% over conventional space, totalling £1.85m. |
