Market

The Group’s business model is simple. We are a property-based business providing a variety of accommodation for small and medium sized enterprises (SMEs) principally in London.
There are over 4 million businesses in the UK, of which 1.1 million are SMEs employing between one and 20 people. Of these, 14% or in excess of 150,000 are based in London. London alone accounts for 20% of business start-ups and closures in the UK each year and sees the greatest growth in higher ‘added-value’ businesses. This is a huge market place and despite being the leader in our field our market penetration remains low. There remains, therefore, considerable scope for us to grow. Our customer base reflects the diversity of the London economy. The three principal business sectors in London are financial services, business and advisory services, and the creative and cultural industries. Our customers include many from these latter two sectors. They make attractive customers to Workspace since they are usually high ‘value adding’ businesses, ones which are able to increase earnings over time.

Our new customers are mainly second stage businesses, who have moved on from a home environment to more formal business premises. Many of them will, in time, relocate within our portfolio as their need for space changes. Churn – the formation, expansion, reduction and closure of businesses – is a key characteristic of the SME market and a source of opportunity for us. The constantly changing SME community provides us both with new customers and the opportunity to relocate others; each allowing us to review and increase rents. Finally the Group is very well placed to take advantage of current trends for the growth of London (of both population and employment) and the call in the Mayor’s London Plan for more intensive and mixed use of sites so that these increasing demands can be met within the existing built areas. Our assets are valued at a comparatively low level of £207 per sq ft. They are not intensely developed and so, in the medium term, the potential for alternative use and intensification of use remains considerable.