Where to locate your business
When it comes to deciding where to locate your business, there are plenty of reasons for choosing one place over another from transport links to amenities. However, the cost of rent will inevitably form part of the process.
Rents are determined by a number of different factors such as location and desirability as well as demand and supply.
When Bonsors was asked to present at Richmond Rugby Club's business forum, we looked at the cost of locating your business in Richmond compared to Kingston upon Thames just a few miles away.
Richmond is leafy and village-like in its appearance and ambience. The High Street is lively with quirky boutiques, independent retailers, stylish restaurants and upmarket cafes. Overlooking the River Thames, it emanates a curious mix of idyllic, chocolate box village and cosmopolitan, trendy suburb. With the advantage of being on the tube line and subsequent direct links into the heart of London, just like nearby Wimbledon, it's a great place to locate your business, but it comes with a pretty hefty price tag.
However, it’s not all about location.
In 2013 we saw the proliferation of permitted rights whereby developers and landlords were able to redevelop office space into homes without the need for planning permission.
Richmond has been a prime target although admittedly, much of South West London has suffered a loss of commercial space as a result. And, as we all know, when there’s a lack of supply but demand remains high so prices increase.
Business owners in Richmond who haven't renegotiated their rent recently or whose rent renewal is due in the next year or so, could be in for a shock.
Compare Richmond to Kingston and the latter doesn't quite measure up in the same way despite its somewhat similar Thames-side location.
Office rents in Richmond are higher than in Teddington or Kingston. In some cases rents can be double.
Most commercial rental agreements are for five years and in 2012 and 13 rents for top quality office space in Richmond were around £30 per square foot. Today, those costs have leapt to around £40-£50 per square foot. Businesses due to renegotiate rents can expect to pay this rate whilst those whose agreements come to an end next year are likely to be faced with even steeper rents.
By comparison, office space is currently around £25-£30 per square foot in Kingston and just a few miles down the A316 in Teddington. So, our advice would be not to rule out less expensive areas. Kingston, for example, may not have tube links but there are regular overground services into the capital and although a few years away, Kingston will be a stop on the new Crossrail 2 development.
If you are outgrowing your premises, but you don't want the expense of relocating or you are only part way through your rental agreement, there are other options.
Calling in the experts to undertake negotiations could well prove a time and cost saving, even if rents are not reduced, skilled negotiators are likely to achieve other benefits such as a shorter term lease or break clause.
There’s also a growing trend for flexible work spaces. Popular with start-ups, work spaces like Google Campus in Shoreditch enable businesses to rent a desk and meeting rooms for a few hours, a day or on an on-going basis.
Such hubs are now appearing outside central London – Kingston’s new development St George’s has a flexible space earmarked, for example. If you need to scale up operations, flexible working could provide the solution. There are no moving costs and you won’t be faced with higher rents demanded by the current market. Your employees will probably enjoy working in a different and very contemporary atmosphere and they may well make valuable business connections, a graphic designer, for example, you need for your new brochure.
If you need to move or if your rent negotiation is due, we advise exploring all avenues or asking the professionals to do so on your behalf, including considering a less expensive location.