by Shane Henson — December 30, 2013—The British Council for Offices (BCO) recently published research carried out by the Centre for Economics and Business Research and Populus indicating that the U.K. commercial community spent an estimated £28.5 billion on offices in 2012—outstripping business expenditure on legal services (£24.3 billion), accounting (£14 billion) and insurance services (£23.8 billion).
Despite this, nearly three-fifths (57%) of the 250 senior executives from large organizations surveyed said property issues were not regularly discussed in the boardroom, and responsibility for property is still likely to fall outside management teams.
The survey found signs that businesses are starting to wake up to the potential business benefits that office space can deliver, but still take a very cost-centric view towards the workplace. Despite the fact that almost three-quarters of organizations reported that they were constantly analyzing and assessing whether their space is being used efficiently, cost was found to be the most important factor in assessing the office’s performance (73%).
With 68% of organizations surveyed likely to review how their office space is used in response to organization growth or investment, the BCO believes that there is a significant opportunity as economic recovery accelerates over the next few years for businesses to start to see property as having the potential to bring significant benefits to their overall performance.
While staff retention and productivity were recognized to be important factors in assessing the performance of office space, those surveyed admitted to failing to look at the role of office space when productivity dropped (40%), recruitment and retention levels fell (39%), or staff morale fell (27%).
“What many businesses don’t understand is that by using property efficiently, treating it as a resource to be optimized, it can deliver tangible benefits in employee performance through increased productivity and wellbeing,” said Richard Kauntze, chief executive of the BCO. “Businesses shouldn’t wait until costs need to be cut before reviewing their office space—it’s important that they look at how to get the most out of it like any other expenditure. This is why we believe management boards need to recognize that property merits greater attention.”
Other findings include:
- Of the estimated £28.5 billion spent on offices in 2012, rent accounted for almost half of this cost at £13.6 billion, while rates were a fifth at £5.6 billion. The remaining £9.2 billion consisted of furniture, repairs and facilities management.
- The expenditures associated with office occupation make up a significant part of the cost base of the ‘office-intensive’ service sectors. For instance, offices cost the professional services sector an estimated £5.3 billion and the finance and insurance sector £3.2 billion.
- From those surveyed, companywide wages, salaries and employee benefits accounted for the highest proportion of annual turnover (23%), and rent was 9% of businesses’ external spend.
