1 March 2011
Author: GVA Grimley, Henley Business School - Corporate Real Estate Survey
This is a continuation of the surveys that GVA Grimley have carried out since
November 1994, and is now undertaken in partnership with Henley Business School.
Going forward the survey will continue to look at the key elements that have been an integral part of the survey from the beginning, such as business confidence and occupiers intentions relating to property holdings, as well as a number of areas that have been given a more in depth consideration. As part of our future work we will also be looking back over the last 16 years to review trend lines and we shall also be exploring new areas of how property and business inter-relate. This report however will focus on the last three years with a particular focus on the last six-month period and the next six months. The survey was carried out through March 2010 and had 84 respondents. This is a smaller sample than the more recent surveys and as a consequence we are not producing specific regional analyses this time, and for some of the sector groups the numbers are lower than we would like.
The period from autumn 2009 to spring 2010 has been one of change with the UK economy finally coming out of a recession that lasted six quarters and was the longest and one of the deepest recessions of all of the G7 economies. For businesses of all types it has been a difficult period with a reduction in output and associated job cuts. The emergence from the recession has been hesitant in some sectors, with growth in the final quarter of 2009 at a below trend 0.4%. This has been reflected in the results of the Spring 2010 Survey, which was carried out in March 2010 across a wide range of UK businesses, and has produced a number of contradictory messages across the various measures and between sectors as well as for different sizes of business.
Within the survey report are two commentaries on the results. The first is by Professor Ginny Gibson, Professor of Corporate Real Estate at Henley Business School, looking at the corporate real estate aspects of the results, and secondly Stuart Morley, Head of Research at GVA Grimley, considering the results in the light of economic and property market parameters.
• Confidence in the future, two years time, has returned with a balance of +53% of firms expressing optimism, a
significant improvement from the neutral +6% six months ago.
• The projection for output has continued to improve with the net balance of +38% of firms indicating an increase in
output in the next six months.
• Progress on employment is more mixed. Whilst there has been an overall improvement from -28% in spring 2009
to a neutral position of +2% in this survey, there are significant variations across sectors with some projecting further
• The impact of the tight credit conditions and the effects of the recession are starting to ameliorate, but the effects of
the recession are actually increasing in certain sectors.
• Without any constraints two thirds of occupiers would like to change their property portfolio. That is split evenly
between those wanting to expand and those wanting to contract.
• There was a significant increase in the number of businesses reducing their property portfolios over the last six
months, which was much greater than the anticipated number from the Autumn 2009 Survey.
• The projected change to occupiers' property portfolios shows a minor decrease in those not doing anything and
increases in those undertaking expansion but also a minor increase in the proportion contracting.
• Business decision making is focussed on improving profitability; the impact of the recession; reducing costs and
improvements to cashflow.
• The primary property drivers are cost reduction and cashflow.
• The proportion of occupiers looking to operate lease breaks and to reduce the number of lease renewals in order
to re-balance their property holdings is increasing.
• Mobile and home working together with outsourcing are the major areas where occupiers are looking at technology
to impact on the workplace.
• One third of occupiers have indicated they will look at relocations of some of their activities from the UK, the same as
in the Autumn 2009 Survey, but for certain sectors the outcome of the general election could cause a greater increase
in their propensity to relocate.