The changing and growing importance of offices in the UK’s financial services sector
Given the amount of talk about how the office is supposed to be dead or dying, there continues to be a surprising amount of demand for it. Indeed, in many of the UK’s cities, demand continues to outstrip supply, especially in those sectors that hothouse in particular districts.
Take the financial services sector in the City of London and Docklands. According to a study published by Cushman & Wakefield this month, the City of London office market recorded the highest volume of lettings for fifteen years, while Docklands saw take-up exceed 1 million sq. ft for the first time since 2010. The largest deal cited in the study was for 374,000 sq ft at 10 Upper Bank Street, let to Deutsche Bank.
This is not a one off development as there is a well known long term structural deficit in the amount of office space being developed in places like London that has become a major concern for developers, occupiers and government. That is why rents continue to rise as firms in key sectors continue to compete for the best locations as a way of recruiting the best talent and making visible statements about their performance and status.
What has become increasingly clear is that while the recent economic downturn meant companies had to take some tough decisions about their cost base, it also drew renewed attention to the ways in which assets such as offices could be used to create competitive advantage. There is clearly a balance to be struck here, because while it is possible to cut the cost of office space with intelligent design and management, that must not be done at the cost of lower staff productivity and the creation of potentially fatal problems with the recruitment and retention of talent.
The complexities of this balance for firms in the financial services sector were the subject of a recent report by architects HOK. The HOK Benchmarking Report, published last September, lays bare the key design trends at financial services firms over a period of three years, at a time businesses were not only emerging from the recession but also seeking to restore their reputations.
From a purely practical point of view, its key finding was that firms in the sector underutilise their office space by just under a half (48 percent). This means that firms can typically accommodate growth within their existing space, especially if they heed the advice from the report to create a range of work settings that not only encourage the more efficient use of space but can also foster multi-disciplinary collaboration, the sharing of knowledge and ideas and the creation of new working relationships.
Modern integrated furniture solutions such as Be by Bisley™ allow optimum use of available space and can evolve with the changing needs of the business.
One thing the report does not suggest is that it is now possible to do without office space. Indeed, it found that firms see the headquarters office as a key weapon in the sometimes acrimonious and global war for talent in the major financial services enclaves. According to the study, people in the sector like some space to call their own and so employers know that it is no good addressing employees as their major asset, only to see them walk out of the door because they do not feel like they have a home.
What the report makes clear, and it is our own experience at Bisley, is that there is little doubt that offices will continue to get leaner, supporting more people from the same or less space, even in those areas where demand continues to grow overall. Office space is already being designed and managed more intelligently, taking advantage of mobile technology and new management cultures to allow people to have a place to call home while working in new ways alongside each other. We have already seen that there has been more and more focus on shared spaces and resources, alongside an ever greater emphasis on identity, both for clients and employees as a way of binding everybody to the organisation.
The office landscape will see greater focus on shared spaces and resources.
This demands a sophisticated approach from employers and a wide range of professions including architects, designers, developers, HR, facilities management and IT to address the new challenges in an holistic manner. These are exciting and challenging times as we enter a new phase in the design and management of workplaces. What is consistent, however, is that the office retains its prominent role at the heart of the organisation and nowhere is this more evident than in the financial services sector in the UK.