Total occupancy costs drive the decision behind the need to occupy smaller yet quality floor spaces as corporates closely monitor their budgets in line with business operations and performance.
“Companies strive to limit their occupancy to optimised floor space in ‘fit-for-purpose’ buildings, taking account of their ever-reducing headcount,” says Stephen Westwood, Consultant: Occupier Services for Broll Property Group.
Westwood explains that international occupiers look for buildings that adhere to global design standards with a shift away from cellular offices. The focus is now on open-plan and collaborative spaces that match work functions with the dual purpose of reducing the cost of occupation and improving productivity.
Occupiers want to maximise results and savings, so space utilisation per desk has been more important than ever to align with the working requirements of each of the business portfolios. This can deliver an average cost reduction of 40% while a space reduction of up to 70% can be achieved depending on the business.
“Portfolio optimisation is really about the right space, for the right people in the right location and at the right cost,” he says.
Westwood says the combined effects of technology, outsourcing and globalisation result in different company distributions and reduced staff levels. Administrative functions are increasingly internationally centralised, focussing country-level activity to core business services.
While there is demand for space from occupiers, there are challenges including availability of suitable stock to meet business requirements, lack of sufficient knowledge about different markets, infrastructure and accessibility, proximity to competitors and to financial services providers, global design standards, productivity and efficiency, office space configurations, lease terms/ legal procedures for leasing, availability of space for future growth, parking ratios and security.
“With the upcoming elections in August 2017, there has been a slowing in real estate activities in Kenya. Some occupiers have their plans to expand on hold until elections are over and this happens every five years where investors adopt a wait-and-see attitude,” says Sheila Muasya, Occupier Services Manager: Broll Kenya.
She says many global corporates continue to set up regional offices in East Africa, however, they are also looking to occupy smaller spaces with high quality floor spaces. Preferred areas are capital cities and key locations including Nairobi and Mombasa in Kenya, Kampala and Entebbe in Uganda, Dar es Salaam, Arusha and Dodoma in Tanzania.
These locations are economic hubs with easy access to and from the airports and ports, they are close to services required for business operations and infrastructure in these locations is suitable for the needs of national and multinational corporates.
“Many local corporations and business leaders are yet to embrace the significant benefits they stand to gain from working with property advisors with both local and international capabilities and who clearly understand the commercial objectives of their businesses for occupier services, she says.
One probable consequence of the constant drive for cost efficiency is likely to be that prime office space will increasingly be reserved for client-facing and key functions with support services delivered from less-expensive buildings locally or out of country, points out Westwood.
“There needs to be recognition that occupier businesses are going to be delivering greater outputs with fewer staff and from smaller premises. “Quality, facilities, access and infrastructure will be ever more important,” he adds.