Office Rents Are on The Rise, But What Can SMEs Do About It?
Office rent prices 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, which is why it is important that occupiers of the property conduct early rent reviews and think carefully about relocation decisions, especially when the price of rent could be a substantial amount come 2019.
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, but 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, and an even further 507% increase in 2019.
This poses a challenge for occupiers after Company Registration to find and secure a space within the CBD with attractive rent prices, even if it involves lease renewals at the existing location. Are there any strategies than SMEs can adopt to cope with this increasing trend in rent prices?
Yes, there are.
Evaluating the Workplace
This is one way a company can help potentially manage their real estate footprint, by choosing to adopt an activity-based approach strategy when it comes to work. 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 work station. For example, employees could choose to work at the lobby, or at a casual meeting space like a coffee shop in the downstairs lobby. This approach will provide greater flexibility and a more agile work environment.
Evaluating Technology at 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 that 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, design and planning, hoping to create a workplace which not just boosts staff engagement and productivity, but enables mobile working too.
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 an office space was an idea first brought about in 1991, and this was advocated with the aim of bringing work and home closer together to help ease congestion which is experienced 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 is essentially designed to provide additional space for future expansion, and it is built 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.