Location. Location. Location. BY DOMINIC BROWN
Five Ways to Maximize Office Relocation Opportunities.
Globally, office markets are diversifying. The rise of new fringe markets, suburban markets and bespoke business parks have provided fierce competition to established central business district (CBD) locations. Along with decisions surrounding country and city locations, occupiers now have to assess a range of potential locations within a city as well. While this presents a range of opportunities, each of the markets and sub-markets offer their own set of advantages and disadvantages.
Here are five key factors outlining a systematic approach to analyze office market attributes as part of an overarching office location strategy. All can be readily combined into a composite index with variables assigned different weightings based upon their level of importance.
1. Define Market Catchment
While it is readily presumed a smaller market will draw workers from a smaller area, this in itself is inherently fuzzy and does not provide any formal delimitation. In the absence of reliable data, using an arbitrary buffer
radius offers the simplest approach. However, a detailed analysis of journey to work patterns provides a far more comprehensive view that directly reflects commuter flows and highlights from where the largest volumes of workers are sourced.
2. Identify Demographic Characteristics
Demographic characteristics of the catchment population are critically important. With today’s “war on talent,” access to a high-quality workforce, that reflects the needs of the company, is imperative. Whether it is relocating a head office, development of a new call center or consolidating back office functions – the need for quality staff is constant. The educational, occupational and demographic requirements of the staff, though, will vary. In determining the target demographics of a workforce and their subsequent position, consideration should be given to factors such as the location of university campuses, areas with young families where parents may desire more flexible working conditions and concentrations of workers with tertiary education. Such information is readily available from government data. An understanding of your target employees is essential; with that each catchment can be assessed on whether it offers what is required.
3. Analyze Accessibility to Top Talent
A location must be accessible to attract workers, and this is often a key difference between CBD, fringe
and suburban office markets. Central business districts are at the confluence of several public and private transport routes, making them readily accessible across a range of transport modes. In contrast, suburban office markets, especially those that are newly developed, may be lacking high quality public transport access and rely on private transport, raising correlated issues around levels of parking provision. Analysis of journey-to-work experience as well as qualitative and quantitative assessments of station locations and transport route gives the data in CBD, fringe and suburban markets.
While accessibility is an important consideration in any location strategy, it is especially important when relocating offices. It is obvious that relocations impact existing employees, but the level of impact needs to be quantified. All other factors being equal, moving closer to the geographical center of where employees reside will likely yield beneficial outcomes. Analysis of this type can also help identify which business units are most impacted by a potential move and allow for “what-if” scenario planning.
Another point to keep in mind is the quality of infrastructure projects, which can transform a location and should be included in a forward looking view of the market. Finally, are there any “game-changers”? Quality infrastructure projects can transform a location and should be included in a forward looking view of the market.
4. Locate Local Amenities
Local amenities build worker satisfaction. Having a range of service providers in close proximity to the office allows a greater ability to manage work-and home-life demands. This can include having a range of options for food and refreshments, retail facilities, child care, medical and educational service providers. Landlords have identified this trend and are offering a greater range of concierge services in buildings.
5. Determine Commercial Considerations
When assessing any location strategy, naturally commercial considerations play a role. Having decided on which locations are most desirable from a workforce perspective, those locations must be able to meet the space requirement in a financially sensible way. For immediate requirements, this is more a reflection of current vacancy and market rent. Future requirements are likely to include a greater range of factors, such as the market’s ability to accommodate a development of suitable size and quality in the desired timeframe, and what is the profile of the developer and lessor? The range of options is also important in negotiating
leverage. Ultimately, commercial considerations are the final go/no-go in the decision making process – if there are no options to meet the requirement, an alternative market strategy must be adopted.
The above factors can be readily combined into a composite index, with variables assigned different weightings depending upon their level of importance. Not only does this assist in honing a city wide search down to individual sub-markets, but also provides a clear understanding of which sub-markets are preferred and why.