Size does count

When it comes to leasing property, size is starting to really count.

It has always been prudent to lease just the right amount of space that you need, and if you were confident of growth, you might, as with a growing child, perhaps take on a size to grow into.

Over the years, I have spent a lot of time strategising with clients to accurately assess their future space needs against their business growth strategy. And I am happy to say that we have got this down to a fine art.

However, current market trends are sending the space needs of businesses in all directions, and these days business growth does not always translate into a need for more space.

As some businesses move to reduce staff, others are looking too at how much they can become a virtual office with employees working out in the field, and from home, spending less time in the main office.

This is creating a whole new dynamic of predicting space needs.

New Zealand is not alone in this trend. Researchers in the United States have discovered businesses can save up to 80 percent on their property costs through telecommuting initiatives. Americans appreciate the opportunity to work from virtual offices as they save on community expenses and find themselves more productive.

Another trend in the United States is, as we reported here last week, the rising number of tenants seeking shorter lease terms as unemployment rises and the economy remains uncertain. On the flipside, those willing or able to take on longer term leases are achieving deals that would have been unheard of in the last few years.

I think it most likely that New Zealand will continue to follow the trends in the United States that is seeing vacant office space rise significantly.

But be sure to remember that while there is a vacancy trend and a growing tenant’s market, it is important not to over estimate your real space requirements for the future.