December 6, 2013
The UK spent an estimated £28.5 billion on offices in 2012 – outstripping business expenditure on legal services (£24.3bn), accounting (£14bn) and insurance services (£23.8bn). Yet despite this, nearly three fifths (57%) of 250 senior executives from large organisations in a recent poll said property issues are not regularly discussed in the boardroom and responsibility for property is still likely to fall outside management teams. The research, carried out by the Centre for Economics and Business Research (Cebr) and Populus, found businesses take a very cost-centric view towards the workplace. Although almost three-quarters of organisations were constantly analysing and assessing whether their space is being used efficiently, cost was still found to be the most important factor in assessing the office’s performance (73%).
With 68 per cent of organisations surveyed likely to review how their office space is used in response to organisation growth or investment, the British Council for Offices, which published the research believes that there is a significant opportunity as economic recovery accelerates over the next few years for businesses to start to see property as having the potential to bring significant benefits to their overall performance.
While staff retention and productivity were recognised to be important factors in assessing the performance of office space, those surveyed admitted to failing to look at the role of office space when productivity dropped (40%), recruitment and retention levels fell (39%) or when staff morale fell (27%).
Richard Kauntze, Chief Executive of the BCO, said: “Property is a significant expenditure to UK plc, but is typically seen as no more than that. What is often overlooked is that it is also a very small proportion of the overall cost of running most businesses when contrasted with the cost of the pay roll.
“What many businesses don’t understand is that by using property efficiently, treating it as a resource to be optimised, it can deliver tangible benefits in employee performance through increased productivity and wellbeing. Businesses shouldn’t wait until costs need to be cut before reviewing their office space – it’s important that they look at how to get the most out of it like any other expenditure. This is why we believe management boards need to recognise that property merits greater attention.”
Other findings include:
- Of the estimated £28.5bn spent on offices in 2012, rent accounted for almost half of this cost at £13.6bn whilst rates were a fifth at £5.6bn. The remaining £9.2bn consisted of furniture, repairs and facilities management
- The expenditures associated with office occupation make up a significant part of the cost base of the ‘office-intensive’ service sectors. For instance, offices cost the professional services sector an estimated £5.3bn and the finance and insurance sector £3.2bn
- From those surveyed, companywide wages, salaries and employee benefits accounted for the highest proportion of annual turnover (23%) and rent was 9 per cent of businesses external spend.