CHALLENGE SUMMARY: Infrastructure
Affordability. Availability. Suitability. It quickly became clear that one of the foundational challenges for fast growth companies in the region is office space. Planners, agents, office managers, investors all articulate similar concerns, not least the 20 year low in office space availability and the lack of innovative practice in the area.
Office space through a scale-up lens:
A scale-up founder is likely not to be financially and operationally ready to secure a larger office until it is needed, let alone have the time or capacity to conduct a search. And even at that point they can’t always confidently predict their growth trajectory, with more variables to consider than I’d comfortably list. A founder may also be in a variety of situations with respect to funds but the vast majority will have little covenant – particularly when compared with the competition whether a large corporate or a student residential developer.
Further, founders will most probably be coming out of a serviced office or an incubator space and won’t be aware of the complexities (and dangers) of the lease process, or the additional costs and responsibilities associated with taking their own premises on. So we see more founders taking flexible leases with multi-occupancy ‘grow on’ spaces like Regus, Orega or Origin Workspace – a solution which will support their growth in the short to medium term.
What has happened this year?
The main priority was to better understand the nature of this challenge for scale-up founders. Armed with this information and new connections, the Scale-up Enabler organised events, training and a property adviser in residence service to help inform and educate founders, challenge the current status quo and identify solutions.
We explored the possibility of large corporate businesses subletting parts of their space to others but repeatedly came up against restrictive lease terms.
We worked with Business West to gather insight into the magnitude of this challenge and presented an open letter to the mayors’ offices in an attempt to prompt public intervention or support. This led to a useful and interesting roundtable discussion and seeded some potential solutions.
We’ve seen three major new multi-occupancy spaces come onto the market in Bristol (Origin Workspace, Runway East and Framework), The Stable in Weston-Super-Mare and Regus Spaces in Bath.
And what next?
In May 2018 the Scale-up Enabler heard the first rumour of student residential space being converted to offices due to demand – whether this is the start of a trend or an isolated instance remains to be seen. There are at least 8 multi-occupancy office management companies looking for 20,000sqft or more at the moment – and Engine Sheds 2 and 3 on the (longer term) horizon which suggests this problem could be in the past before the end of the decade.
The need for light-industrial space blended with offices still stands and less solutions are forthcoming so far.