Procurement 2 September 2015

Thinking about where to set up shop? Look beyond the cost of rent

Stoneleigh Park
Stoneleigh Park near Coventry is one of BEST Network’s locations and a great spot for rural businesses

The European director of LaSalle Investment Management discusses the importance of finding a landlord with a long-term view to find a space that will prove most nurturing to your business.

For hundreds of years, commercial enterprises of the same type have tended to cluster together. While this has been partly driven by the target markets that those businesses were looking to access, there have always been other sound commercial reasons why setting up shop amongst your peer group makes sense.

You can learn from your neighbours, see what challenges they’re facing and how they’re adapting to them.

In today’s commercial world, we’ve maybe lost sight of this somewhat. With our eyes always on the bottom line, the decision as to where to take business space is often driven more by cost than an assessment of the contingent advantages of any particular location.

However, I’d argue that businesses – and especially fledgling firms – need to find locations which are the most nurturing to their enterprise.

We count ourselves as being among a new breed of landlords who look to work with their occupiers and provide environments which support businesses by providing more than just four walls and a roof. This isn’t altruism; it’s good business sense.

We know that if we help our occupiers grow and are a positive influence on their business then they are more likely to take more space from us and stay in our buildings longer. That equates to a bigger turnover for the occupier and more rental income for us.

The recession may have compelled many landlords to be more engaged but the more enlightened have always seen how the relationship with tenants can best work.

If you’re a startup business you should look for a landlord who has a long-term view and a location which may offer more than just bricks and mortar. You should be looking at what the landlord will provide over and above the competition and also who’s next door. Are there synergies between your businesses? Can you learn from their experiences?

A good example of this synergy in action is BEST Network, LaSalle’s portfolio of six science parks which provide first-class space but also aim to foster excellence in biomedical, pharmaceutical, science, technology and agriculture related sectors by providing infrastructure and the exchange of knowledge and expertise.

Hexagon Tower based in Manchester
Hexagon Tower based in Manchester

The network spans the length of the UK and contains both geographical and network-wide clusters in some of the UK’s highest-growth sectors. It includes both well-established science and technology parks and those undergoing investment to attract high-technology activities.

It’s the largest privately-owned portfolio of science and technology parks in the UK, and has provided us with a huge amount of insight as to how businesses best flourish. Just one example of the close interest we take in our occupiers is well illustrated by the fact that at each of our parks we pay a public relations agency to secure media coverage for our occupiers’ successes.

And we don’t mind sharing knowledge with occupiers for our mutual benefit. That knowledge extends to essential areas such as how to secure grant assistance or raise venture capital backing.

Businesses need property providers who reflect their own values and standards.

Sustainability is of major importance in today’s business environment. Customers and clients of business are increasingly demanding about the sustainable credentials that a supplier or consultant can demonstrate. This rigour extends to the space that businesses occupy.

Our science parks are certified to Environmental Management certification ISO 14001:2004 while green travel plans provide employees with a multitude of responsible ways to get to work, be it extending public transport routes or providing cycle sheds and shower facilities.

Science parks are specialist environments but we are implementing the same principles with other types of property in our ownership. For example, in some of our retail properties we’ve provided turnover leases where the level of rent is determined by the amount of turnover the shop is achieving. It’s a mechanism which shares risk and aligns the interests of landlord and tenant.

As I mentioned, we’re not the only landlord taking this approach but it would be wrong to say this is the norm.

A few years ago, I had responsibility for finding us new offices. It was absolutely fascinating for the first time to be a tenant looking for space. I was amazed at how few providers actually asked me what I wanted other than how many square feet of space.

It was a learning experience for me and I think the message for all companies – whether they be longer-established firms or new businesses – is that when they’re searching for somewhere to locate they should look beyond what the rent is and question what else they’ll be getting from a landlord.

Andrew Bull is European director and fund manager of LaSalle Investment Management.

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

Insurance