The autumn equinox has been and gone, ushering in the season of falling leaves, the approach of Halloween and the time of ghosts, ghouls and…..zombies?
As the evenings draw in a lot more is being revealed than just the stars above the Reading skyline, it would seem.
Travelling through commercial office locations after sundown it’s possible to pick out what, in the office market we are terming ‘zombie’ (sometimes known as grey) space.
This is the term used to refer to office space which is surplus to requirement for the original tenant, but where the lease is yet to expire, in some instances for many years.
Thanks to the advent of energy saving PIR (passive infrared sensor) lighting and rapidly changing technology-enabled working practices which are creating increasingly agile workforces, the prevalence of such space in and around Reading and some of the Business Parks in the Thames Valley, is clear to see. And there is a surprising amount of it about.
It can comprise anything from a small parcel of underutilised space to, in some cases, entire floors or buildings which neither are occupied nor being formally marketed as available space to rent.
Indeed, our estimates* indicate that over 750,000 sq ft of office space is lying empty or underutilised across Berkshire.
Given the dwindling supply of Grade A newly refurbished or new build offices and the steady demand for good quality office space in Reading and the wider Thames Valley, could this space be better utilised or marketed more clearly for sublet/assignment?
It would certainly help the businesses currently leasing this zombie space, but also those looking for a more flexible office opportunity.
Why does zombie space exist?
In our experience, many businesses today struggle to keep on top of their evolving real estate requirements because the workplace is evolving so rapidly.
The length of ‘conventional’ leases, which can range from 3-25 years, can make it difficult for companies to anticipate potential changes which might impact their business’ office space requirements – from evolving workplaces and more flexible working practices, to advancements in technology and the increasing use of AI and business process automation.
What is more, with perceived or actual lack of supply depending on the location and limited options of a specific size, occupiers are being forced to sign up for longer terms than are actually required.
How to avoid ending up with zombie space
Business contracts, staffing levels and space utilisation are evolving, so taking a flexible, needs-based approach is key.
In an ideal scenario, businesses would take on no more space than is needed and would carry out detailed space utilisation requirements ahead of signing up to any lease.
Investing the time and money on professional advice ahead of a project in this way can save huge amounts on potential ongoing liabilities at a later date.
And if you have a specific contract-based requirement with a known end date, it is worth building agreements around those timescales.
If flexibility is key, it may be worth paying a more premium price to take space in some of the co-working or serviced offices that have become increasingly prevalent in recent years.
What can be done about your zombie space?
Provided the terms of your existing lease allow you to sub-let or reassign space, surplus space can be repositioned, creating an attractive and flexible opportunity for other businesses.
But be aware of alienation provisions within your lease which will stipulate whether you can do this.
There are also business rates savings that can be made where offices, or parts thereof, are no longer being used or occupied.
A quick review of your occupational needs to bring teams closer together can also release further space and create larger savings.
Partner and Reading office agent expert, Charlie Nicholson, comments: “With certain locations lacking in office stock, there is a real opportunity for tenants to market well-appointed surplus space in order to mitigate costs and make efficiencies savings.
“In some instances, offices need to be invested in to make them a more modern, attractive proposition if they are to compete with the fitted solutions now being offered by both co-working and on more conventional leased space such as LGIM’s ‘Capsule’ flexible leasing offering.
So, whilst the zombie apocalypse hasn’t come to Reading, zombie space has.
The good news is that there is something that can be done about it, for the benefit of existing and potential tenants.
With investment in repositioning the office environment, common parts and amenity offerings, vibrant, multi-tenanted buildings can be created for the benefit of existing and new tenants alike.
Our lease advice and office agency teams have their fingers on the pulse of office availability across Reading and the wider Thames Valley region.
For help with your zombie space, or to take advantage of such space in the Reading or wider Thames Valley area, don’t hesitate to get in touch for more information.
*Based on a detailed observation report backed by research on office vacancies over 1,000 sq ft in Berkshire.