What’s driving commercial property decisions?
26th February 2018
Location may be the biggest influence on any commercial property decision, but it’s not the only consideration. Gary Watson of JLL, who is advising the team at Kent Medical Campus in Maidstone, considers the issue.
With the Brexit negotiations now under way, firms in every sector, from legal services to manufacturing, financial companies to tech-based businesses, will be assessing their property requirements. The focus will be on matching their property needs with their strategic ambitions, and at the same time minimising the risk in a changing business climate.
Commercial property is often the second largest cost for businesses after labour, and good decisions can significantly increase long-term company performance. Poor decisions can cost millions in capital, talent, productivity and brand.
Businesses must consider what they’ll look like and where they want to be in 10 years’ time, and so real estate is integral to a business’ strategy.
Talent, talent, talent
With the uncertainty over what Brexit will actually look like, the ability to attract and retain talent will be increasingly important when deciding where to invest. Businesses need to consider demography and lifestyle; immigration and globalisation; working practices and sustainability, as well as accessibility.
The pre-eminence and quality of talent available is critical to a business’ success. Positioning real estate to attract and retain the best talent is gaining importance, and often means accessing centrally located sites. The focus on driving development east of London into Kent will stimulate the growth of local talent.
Access all areas
Accessibility is a prerequisite for new investment, whether it means securing new markets and customers, or accessing physical or natural resources.
Transportation is critical to the resilience of supply chains. Thanks to HS1, its two international railway stations, and several ports, Kent benefits from strong links to London and continental Europe.
Birds of a feather
Clusters drive innovation, knowledge sharing and collaboration. In the case of Kent Medical Campus, the emerging cluster focuses on health, science and education.
Businesses can reach a large talent pool, a concentration of customers and suppliers, and financial markets and investors.
Collaboration presents opportunities for business and universities to share resources and knowledge, and well-known clusters add brand prestige.
A low risk business option clustering can be expensive, as the competition for talent and property is often strong in well-established locations, such as Cambridge.
With the full implications of Brexit unknown, the issue of corporate tax rates and regulation will focus the Government’s attention as it looks to retain the UK’s attractiveness to investment.
Part of the North Kent Enterprise Zone, Kent Medical Campus has the backing of Government and regulatory bodies, and access to business support services.
Changes to labour laws or free movement impact on access to talent and can and will also trigger location moves, so considering future regulatory changes is essential when making and future-proofing, investment decisions.
Devolution and localism are transferring power from central government to the regions and cities, and mayors are becoming more entrepreneurial when it comes to attracting inward investment.
Kent’s proximity to the global city of London is a double-edged sword – providing access to finance and customers, but the capital also acts as a magnet for talent. In response, the focus of all tiers of government across Kent, and the South East Local Enterprise Partnership, is driving the economy forward by supporting key sectors.
Grants and incentives, such as Enterprise Zones, can tip the business case in favour of a preferred location.
Growth, corporate strategy, technology and leadership change are catalysts for investing in a new location. The challenge is getting the size and location right for the future needs of the business.
The coming years will bring unparalleled change for many businesses and industries, and correctly matching the commercial property portfolio will be an important part in their success.