Moving office? but not far 22nd January 2016

Corporate occupiers in Greater London and the South East move an average of just 6.9 miles when they relocate, but the most common distance is just 0.5 miles (804m), according to Savills research published.

After analysing every Grade A relocation over 20,000 sq ft (1,858 sq m) since 2010 in the Greater London and the South East region, the research concludes that most companies are driven by finding better quality accommodation and retaining staff, rather than cutting costs, and therefore choose to stay in the same area instead of moving elsewhere to find lower rents. While the average occupier relocates 6.9 miles this is distorted by a handful of long-distance moves with the most popular relocation distance being just 0.5 miles. However, this could soon change as property costs in the Greater London and South East region continue to rise and occupiers begin to review their real estate strategies to consider either wholesale moves or splitting front and back office functions between London and out-of-London locations.

The report states that several companies, including Maersk Line (one of the world’s largest shipping companies) has recently relocated all of its IT functions to Maidenhead to benefit from the area’s high supply of technology workers and rents of £35 per sq ft, compared to average Grade A City of London rents of £54 per sq ft, from where it relocated many of its staff.

Jon Gardiner, head of South East office agency at Savills, said: “As our analysis shows, moves over a shorter distance have been most common over the last five years with occupiers in Greater London and the South East, who are much more likely to move within the same area than risk losing staff for the sake of reducing their overheads by moving to a more cost-effective location. "However, we think that this is likely to change with businesses considering longer distance moves in the face of growing property costs. This is particularly relevant for those companies looking to relocate out of Central London, where property costs are significantly higher.“ While there is minimal variation between how far both large and small occupiers are prepared to relocate, there appears to be a difference between industry sectors.

Simon Preece, commercial research analyst at Savills, added: “In 2015 manufacturing businesses moved on average 10.9 miles – significantly further than all other sectors. This is due to recent rapid expansion in the pharmaceuticals sector: with highly skilled, specialist workforces, which tend to be prepared to commute further to their place of work, companies in this industry can look further afield to find space that fits all their requirements without fear of multiple staff losses.”