Office for rent

Posted On Wednesday, 25 September 2002 02:00 Published by eProp Commercial Property News
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Regus CEO Kevin Rawnsley expects vast growth

Property-Housing-ResidentialThe outsourcing of premises can make sense but do a careful cost analysis first.

Companies today have placed the customer at the centre of their business. In a globalised world this often involves owning different properties around the world and the headache of running the office.

It can also mean huge costs to establish a local branch. The same applies to a start-up business that needs professional premises but does not need a full-time receptionist or boardroom five days a week.

There is an alternative to these high costs outsourcing. Office outsourcing involves handing over office management , from paying the rent to organising the receptionist and telephone, to another firm.

Until recently, office space outsourcing was mostly used in the short term. But, more and more, companies are turning to officespace servicing companies to help manage their global portfolio.

Research group Gartner, in a report called Workplace Transformation, says that by 2004, fully 15% of global companies will be serviced by integrated workplace external service providers that will host most employee needs such as occupancy, connectivity and general services.

A global supplier of fully serviced office workspaces, Regus, believes the percentage of companies using external providers will be even higher than Gartners estimate: around 20%.

Before a company decides whether it makes sense to outsource, it should look at the total cost of running the office in the traditional way.

Many businesses look only at the rent when they price the cost of offices. Instead, say office specialists, the total occupancy cost per employee needs to be evaluated, and this involves expenses that are not entirely obvious. Kevin Rawnsley, Southern Africa regional CEO, for Regus, says: It is difficult for companies to get to grips with total occupancy costs. But only when you understand this, can you see if other options are good value.

Total occupancy cost looks at the total property costs. British property services company FPDSavills calculated that office occupancy costs comprise rent, service charges, tax, utilities such as electricity and water, car parking and furniture and equipment costs.

International real estate business Cushman & Wakefield Healey & Baker carried out a similar survey, in conjunction with City University Business School and Actium Consult in the UK. It looked at five aspects and the percentage each contributes to total office costs.

  • Rent: 36%.
  • Rates: 13%.
  • Annualised costs (fittings and furniture): 14%.
  • Hard facilities management (includes waste, security, sewerage, insurance and internal moves): 22%.
  • Soft facilities management (includes telephones, catering, reception, post and disaster recovery): 14%.
  • Management: 1%.

The survey also compared workstation costs with the annual gross salaries (including bonuses and commissions).

It used 14m as the average workstation space (established in previous research) which included the net workstation ( desk, chair and drawers ), and a percentage each of non-productive space such as the central storage area, corridor and coffee areas, board and/or meeting rooms and reception.

The cost of a workstation ranged from 30% to 47% of average annual salary in the UK. The highest average cost (in London) was 13134 per workstation .

While no equivalent survey has been done in South Africa, an expert has calculated the average workstation cost to be R42000.

Once a business has worked out the cost per workstation and the total occupancy cost, it can then look at alternatives.

Service providers have been involved in setting up offices in Africa for South Africa businesses who are moving into the continent.

The typical client is a business either a start-up or a local branch of an international company that is expecting to grow but is not sure how or when this will happen.

South African clients who have made use of the into-Africa service include advertising agency M&C Saatchi, Cell C and e.tv.

Companies are learning that they do not all have to be in the central business district, but can operate better in a decentralised node such as Woodmead and Sunninghill near Sandton, and Tyger Valley or Mowbray near Cape Town.

 

Last modified on Thursday, 22 May 2014 19:41

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