THE serviced-office market, which allows businesses to sign short-term leases, is becoming a more accepted space for many businesses to operate in globally, says Andrew Utterson, group CEO of The Business Centre.
At a time when the commercial office market is under pressure from weak demand and high vacancy rates, and with many property groups increasing their retail and industrial exposure, The Business Centre opened its fifth serviced-office centre in Broadacres, Johannesburg, last week.
The group offers businesses flexible leases, usually for three-, six- or 12-month periods, and supplies receptionists and the necessary infrastructure, which includes internet services, furnished offices, printers and meeting rooms.
The group operates 750 offices within its portfolio, with average occupancies in excess of 90%.
Mr Utterson said the group operated in "a very niche part of the sector", by catering for small, growing companies, and for larger ones that needed to downsize to save costs. The Business Centre, which operates on a model similar to that of the Regus group, also accommodates large corporates that are running projects that require additional space and satellite offices.
"It’s becoming a more accepted form of running your office. Ten years ago it was frowned upon, whereas worldwide now it is the preferred way to operate for a lot of businesses."
The Business Centre’s other operations are in Bryanston, Rivonia, Fourways and Umhlanga. The group will open its sixth centre in Cape Town in September, and intends to open operations in Sandton, Rosebank, Cape Town’s central business district, Melrose Arch, Centurion and the Durban suburb of Kloof.
Consistent with sentiment in the listed property sector, Mr Utterson said: "We don’t look anywhere else other than the key nodes." The company’s long-term target was 20 sites in South Africa and expansion into the rest of Africa.
"We are bullish about our sector," Mr Utterson said. "We’re sitting with the biggest bank balance we’ve ever had before. We’re creating our own market. The demand is there, it just doesn’t know that it’s there."
The serviced office market was thriving because "setting up office space and running infrastructure is very expensive, and it takes a long time".
With necessary infrastructure in place, and services such as receptionists included, the offering was "at least 50% cheaper than if you tried to do it on your own", Mr Utterson said.
The Business Centre sales and marketing director Ceri James said the group focused on governance and maintained accurate records with "the possible plan of listing one day".
"We provide a solid platform for businesses to be successful so that the propensity to fail in The Business Centre is much lower than in a conventional office environment. We have had very little failure in terms of the tenants who rent from us," Mr James said.