Office Rents Are on the Rise, But What Can SMEs Do About It?
Office rents are increasing and SMEs are feeling it. The rental for real estate can be a considerably sizeable portion of a company’s recurring monthly income. This is why it’s important that occupiers of the property conduct early rent reviews and consider relocation options. It’s becoming more apparent especially now when the price of rent could be substantial.
In Singapore for example, premium and Grade A stock of Singapore’s leading market in the city has bottomed in the second half of 2017. However, it does look set to grow this year given the stronger demand for space among some sectors, positive economic outlook and promising business sentiment. Prime office space sectors in the city’s central business district (CBD) could experience a 10-12% increase in rent in 2018. Further, it could increase to 507% in 2019.
This poses a challenge for occupiers after Company Registration to find and secure space within the CBD with attractive rent prices, even if it involves lease renewals at the existing location. Are there any strategies that SMEs can adapt to cope with this increasing trend in office rents?
Yes, there are.
Evaluating the Workplace
This is one way a company can help potentially manage their real estate footprint. It chooses to adopt an activity-based approach strategy when it comes to working. What this means is rather than have employees at a designated desk for the period of work, let the employees be instead free to choose other areas that could double up as a workstation. For example, employees could work at the lobby, or at a casual meeting space like a coffee shop downstairs. This approach will provide greater flexibility and a more agile work environment.
Evaluating Technology in the Workplace
The far-reaching tentacles of technology are inescapable. Tech is everywhere these days and has become so much a part of our everyday lives. It is hard to imagine functioning at work without it. Every day, companies are increasingly finding more ways to integrate technology into their office build-outs. They have been designing and planning a workplace which boosts staff engagement and enables mobile working.
With the help of smart technology, companies can now analyze the optimization of workplace spaces to help cost savings. A sensor, for instance, is able to track how rooms and desks are being used, and smart lighting systems can detect when there’s no movement in the room after a certain period and turn off the electricity for cost savings.
What About Decentralizing the Office?
Decentralization of office space was an idea first brought about in 1991, with the aim of bringing work and home closer together to help ease congestion which is happening in the city.
Of course, this would depend on a company’s business requirements and financial strategy, as the occupier may consider leasing a built-to-suit facility. This facility functions to provide additional space for future expansion, with the tenants’ needs in mind.
Demand for flexible workspace is the one that is going to drive demand this year. Tenants seeking out a new office space should certainly keep the option in mind and be prepared for market shifts in these volatile times.