New research from Savills has revealed that corporate occupiers in Greater London and South East move 6.9 miles on average when they relocate, with the common distance being 0.5 miles.
Since 2010, every Grade A relocation over 20,000 sq ft has been analysed by the real estate advisor and it concluded that the biggest drive for companies to find different accommodation is better quality and staff retention, as opposed to cutting costs. This ultimately leads to them staying in the same area instead of seeking lower rents elsewhere.
This could all change however, once property costs in these two areas begin to rise and occupiers start to review real estate strategies in order to consider either wholesale moves or splitting front and back office functions between London and out-of-London locations, Savills notes. Jon Gardiner, head of South East office agency at Savills, said regarding the eventual increase: “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.”
One of the world’s largest shipping companies, Maesrk Line, for example has relocated its IT functions to Maidenhead in order to benefit from the area’s high supply of technology workers and rents of £35 per sq ft, a much lower amount compared to the average rents of £54 per sq ft of Grade A City of London, which was the relocation of its many staff.
There wasn’t a vast amount of variation between large and small occupiers preparing to relocate, however they found that there is more of a difference between industry sectors.
Savills’ commercial research analyst, Simon Preece, concludes: “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.”