Cost concerns driving firms out of office

Published on Tuesday 12 August 2008 10:23

FEARS over the stability of the economy and the need to cut costs could be forcing nearly 4000 small Scottish businesses a month to close down their offices, according to a new study.

Mobile phone firm O2 questioned more than 500 small businesses and found that in the last eight months more than one in ten have chosen not to renew a lease on an office or business premises and are now working remotely and from home.

It is estimated that more than 30,000 small businesses in Scotland have quit their offices since November.

The research also found that almost two-thirds of those still working from a dedicated business premises are considering giving it up within the year.

The need to reduce costs was cited by 62 per cent per cent of the businesses questioned as the greatest reason behind the move.

Credit crunch fears and the threat of possible recession were also revealed as making small businesses reluctant to commit to new fixed-term rental contracts.

Simon Devonshire, head of O2 SME marketing, said: "Developments in technology and mobile communications are enabling businesses to be flexible and respond very quickly to changes in the market place.

"Getting rid of the office relieves many small businesses of a major overhead very quickly and shows a rapid response to current economic pressures."

A recent report from NB Real Estate revealed that vacant office space in some cities across the UK has nearly doubled compared to this time last year.

In Edinburgh, the recent Drivers Jonas Edinburgh Crane Survey showed that office development activity in Edinburgh has increased from a year ago with six new starts.

A total of 685,000sq ft is now under construction, of which 649,000sq ft is available on the market.

But there are no Grade A office developments expected to come on to the market in the current year, sparking fears that there could be a future supply shortage.

More than half of the city's Grade A space currently available is at Waverley Gate, the city's former General Post Office, where 217,849sq ft is on offer.

In addition to saving on overheads, flexible working and advances in mobile technology have also been identified by the O2 survey as key reasons behind the growing numbers of small businesses choosing to give up fixed business premises.

Nearly a quarter of those questioned revealed they now spend up to 50 per cent of their time away from the office and 57 per cent said that new technologies, such as wireless internet and mobile broadband, had influenced their decision not to have a fixed business premises.