Office Business Centre Industry Key Players Show Enthusiasm for Growth

In line with the pattern of previous recessions, the bad market experienced in most countries last year presented an opportunity for business centre operators to grow in an affordable way.

2009 was a bumper year for the business centre industry, at least in terms of growth. In line with the pattern of previous recessions, the bad market experienced in most countries last year presented an opportunity for business centre operators to grow in an affordable way.

In the UK the supply of serviced office space grew by 30% in 2009 according to research produced by officebroker.com, with a net increase of 725 locations. Whilst it is possible that the growth in supply has overtaken the growth in demand at least temporarily, past experience tends to suggest that any surplus will be absorbed relatively quickly.

Any oversupply that there may be doesn't seem to have dampened the enthusiasm for growth judging by the news this week of Regus's acquisition of the BFI chain of business centres from French property company Affine. The 11 centre chain comprised six locations in Paris, three on the Cote d'Azur and one each in Lille and Lyons. Of course Regus has the advantage when making acquisitions of having both a decent war chest of capital in cash and listed shares that can be used to pay for target businesses.

I have always maintained that the key to profitability in this industry is size, and the ability to call upon capital resources is one key aspect of this. Regus's 2009 financials will not be out until late March but they are likely to demonstrate a respectable level of both profitability and positive cash flow, despite the downward pressure on workstation pricing. Although would-be rival Servcorp is making a lot of noise about competing in Regus's key markets, it will be some time before it or anyone else can wield the clout that Regus does with its revenues in excess of £1 billion p.a. (US$1.6 billion).

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