DISSERTATION PROPOSAL 2014

The great rise of serviced offices in the City and East London

attributed to by the entrepreneurialism of DAMIT SMEs

Supervisor: Judy Smith Student: Harrison Young Student number: 1351443 Deadline: 19/12/14

1

Contents 1.0 Working title 3

2.0 Introduction 3

3.0 Research rationale 5

4.0 Hypothesis 8

5.0 Research objectives 8

6.0 Outline methodology 11

6.1 Data Collection 11 6.2 Primary Research 11 6.3 Questionnaire 12 6.4 Interview 13 6.5 Secondary Research 15 6.6 Ethics 15 6.7 Contingency Plan 16

7.0 Scope/limitations of the research 17

8.0 List of references 18

9.0 Appendix 1, 2, 3, 4 22, 24, 25, 26

2

Abbreviations

DAMIT = Design, Advertising, Marketing & PR, Media, Internet, Technology &

Telecoms company (Farebrother, 2014)

SME = Small medium sized enterprise (Blackburn et al, 2013)

TMT = Technology Media Telecom

CAPEX = Capital expenditures

VAT = Value added tax

PAYE = Pay as you earn

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1.0 Working title

The great rise of serviced offices in the City and East London attributed to

by the entrepreneurialism of DAMIT SMEs

2.0 Introduction

The Government is committed to ensuring that the UK has one of the most

competitive economies in the world, underpinned by a strong competition regime to

enforce the law and tackle uncompetitive behaviour that stifles innovation as implied by

Knight Frank (2014) and (Department for Business Innovation & Skills, 2014).

The Department for Business, Innovation & Skills and Harvey (2012) categorises SMEs

into three sub sections according to size as follows

Micro: as 1- 9 employees

Small: 10 250 employees

Medium: 50 249 employees

Philips (2014) argued that TMT is not a reasonable way to define companies, which fall

into this umbrella term and that the term DAMIT is more a suitable way to express the

range of firms represented.

The Silicon Roundabout is a term associated with enterprises located in an area around

the Old Street Roundabout in London UK as expressed by O'Mara (2010), it is home to

a concentration of more than 100 high-tech firms. This is due to a focused interest from

David Cameron and companies such as Google situating itself nearby. The area has

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recently transformed into what is now known as "The East London Tech City" stated by

Nathan (2011) reaching as far as Stratford as described by (Experian, 2012).

Since the credit crisis in 2007 commercial office tenants are cautious about singing long-

term office leases as mentioned by (Blackburn et al, 2013) due to uncertainly and a

volatile market. This has lead to the increase in demand as researched by Vrensen and

Kuljanin (2014) for high quality office space on shorter leases.

During this time serviced offices has seen a massive increase in demand due to the ever

changing needs of businesses as implied by BNP PARIBAS Real Estate (2014), these

offices are perfect for small to medium sized enterprises as explained by (Pratt and

Hutton, 2013). Advantages of a serviced office are the flexibility, collaborative

workspaces combined with the range of services it can provide inspire energy,

opportunity and optimism as explored by (Foord, 2013).

The following research will:

Explain and define DAMIT SMEs and what other companies are operating in

the market place

Analyse why DAMIT SMEs choose serviced office space in the City and East

London

Assess weather DAMIT SMEs are dominating the demand/ supply of serviced

office space,

Identify what it is that serviced offices provide in conjunction with the benefits

to an investor sub letting their premises to a serviced office provider

The initial A3 poster plan for this research can be found in Appendix 1 p.22

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3.0 Research rationale

This proposal will be a basis for exploring various the rationale to do with DAMIT SME

occupation of serviced offices in the City and East London by concluding with what

lessons can be learnt from the research objectives. The geographical perimeters of this

research has been set to East London and the City of London this spans across three

boroughs as follows City of London, Tower Hamlets and Hackney. The main

dissertation will look at which of these areas has experienced the greatest demand.

London is an international business hub at the forefront of attracting overseas business

as expressed by Knight Frank (2014) and will continue this way in the future to keep its

status as one of the worlds most desirable cities due to Government Incentives, transport

links, return on investment as explained by (HM Treasury, 2014). This status has an

impact on the demand and supply of office space in the capital due to firms demanding

to be located in this area. For a domestic and overseas DAMIT SMEs who are starting

out in the market serviced offices prove to be a vital component in the preliminary stages

of the companies development.

Serviced offices give a DAMIT SME the chance to work in a prestigious area, take

advantage of the range of facilities provided and sign up to shorter leases these are a few

reasons driving the DAMIT SME boom as expressed by Hood (2013) and (Foord, 2013).

This has put a massive strain on the supply of office space leading to companies locating

to fringe areas as research by (Experian, 2012).

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Collaborative work space Start up companies located in Londons Silicon roundabout,

have adapted a new way of utilizing a work space by having many different employees in

a workspace working on ideas for various mobile phone applications. This is so they can

get ideas from each other, this sort of environment inspires creativity that is a vital

component that will influence the outcome of their success. Serviced offices are perfect

for this as many different companies can work in the same workspace, helping for

example a SME being able to use multiple resources directly, network and potentially be

more efficient as justified by (Taylor and Murphy, 2004).

Different areas in London attract various tenants e.g. Shoreditch with a large

concentration of DAMIT companies, the city of London with financial corporations and

the Westend with retail led tenants. Due to the demand out growing supply in terms of

available office space, these traditional locations have seen the rise to areas such as

Clerkenwell, Mid Town and Kings Cross to be explored as new alternative locations for

the aforementioned companies. Thus examining as to why factors such as specific

locations or lease lengths are influencing demand as expressed by (Savills, 2014).

According to Instant (2011) and Harvey (2012) serviced office tenants in London are

attracted by; no hidden office expenses, Immediate occupation available, flexible office

rental terms, simple contract, no need to pay office rent quarterly in advance and no

CAPEX is required

McAllister (2001) discussed the downside to serviced offices in terms of valuation issues,

which will be explored further in depth in the main proposal. The benefit to the

freeholder sub letting its premises will be investigated to see if they are receiving a better

income from using one of these providers as a tenant.

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The Freeholder e.g. Regus would be the main tenant who in turn sublets the building to

a serviced office tenant as implied by (Regus, 2012) This could be a good use for Second

hand office buildings in a regenerating area such as east London by utilising second hand

building stock and using it to provide an income. The freeholders motive in connection

with the following objective is receiving a constant income above market value by

owning a building under multiple occupation. The Costs associated with running the

building should be considered although the service generates income for building

owners.

The occupier base is as varied as the City, but dominated by three sectors; TMT (24%),

Finance (19%) and Legal (14%). TMT and Other Professional take-up activity has been

especially strong in the last five years as stated by DTZ and Jones Lang LaSalle, (2014).

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4.0 Hypothesis

The following hypothesis is a statement, which should potentially validate by the research

that is tested with through the use of primary and secondary research.

DAMIT SMEs are dominating the demand for serviced offices in the City and

East London

The main aim of this research is focus on the two main areas of DAMIT SMEs and the

geographical perimeters, which have been set

5.0 Research objectives

The following 5 Research objectives underpin the whole structure of the dissertation,

with the literature review addressing the rationale this in turn relates to the

aforementioned hypothesis to determine weather they are valid and provable.

1. Investigate the requirements of a DAMIT SME serviced office tenant

2. Discussing how DAMIT SME companies are influencing the market

3. The current situation of Supply and demand in the serviced office market.

4. Analyzing the drivers behind the increase in demand for serviced office

space in London from basic to luxury.

5. Examine how freeholders will benefit from serviced office providers (from

the investors point of view)

The aim of the research is to set out weather the hypothesis is true and any other

reasons, which support the title as defined by (Saunders, Lewis and Thornville 2012).

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The objectives have been further broken down into subsections, which will be expanded

in the main dissertation document.

1. Investigate the requirements of a DAMIT SME serviced office tenant

The Structure of DAMIT SMEs

What a DAMIT SME wants from a serviced office provider?

Which locations they prefer?

Space - how much they use?

Leasing are they willing to pay more and do they prefer short leases?

2. Discussing how DAMIT SME companies are influencing the market

Analyse weather DAMIT SMEs have grown in the last 5 years and how much by

and weather different sectors have grown more than others.

How factors such as the economy, taxation ( such as VAT, PAYE, national

insurance and business rates) and regulations as investigated by SME, business

borough meter (2014) are impacting the market.

3. The current situation of Supply and demand in the serviced office market.

The statistics representing the current situation of supply and demand in the

designated research area

Is there a Lack of supply in the core areas causing these companies to locate to

fringe areas of London.

How much space is available out there an who is actually bidding for it

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4. Analyzing the drivers behind the increase in demand for serviced office space

in London from basic to luxury.

Who are the main serviced office providers for DAMIT SMEs

Are DAMIT SMEs using basic or luxury providers as implied by Meadwell

(2014) and does this pave the way for a provider who caters solely for the

requirements of these specific enterprises.

5. Examine how freeholders will benefit from serviced office providers (from the

investors point of view)

Would a freeholder prefer a serviced office provider occupying a lease in its

building due to their short-term occupation of the premises. Will this be a

problem for the freeholder due to the turnover of tenants or does this provide a

higher income than alternative uses for the building.

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6.0 Outline methodology

Only certain types of qualitative and quantitate research methods are applicable to this

distinctive investigation with various different approaches which will help assesses the

pros and cons of the working title and hypothesis.

6.1 Data Collection

LinkedIn will be used to make initial contact with the serviced office providers and

twitter will be used to contact the employees of a DAMIT SME.

6.2 Primary Research

Questionnaires and interviews with DAMIT SMEs who use serviced office space in East

London and the City fringe, as well as freeholders who lease serviced office space to

these companies will be undertaken. If possible a focus group meeting will be added to

further diversify the research sample as mentioned by (Saunders et al, 2012).

! Contact serviced office providers and DAMIT SMEs get their agreement, draft

questions to them

! Telephone or face to face contact to get their agreement whilst drafting questions

to them

! The process will be recorded with a Dictaphone or make notes if possible

! The initial aim will be to obtain 6 10 interviews with various subjects who are

relevant to the topic area.

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The following table highlights the pros and cons of various research methods

Source: (Macdonald and Headlam, 2008, p. 17)

6.3 Questionnaire

A questionnaire will be send out to agents with the following considerations

Letters of Introduction: Your questionnaire should be accompanied by a brief,

professional and to the point letter that explains who you are and what you are

doing. (Sayce et al, 2014)

Handwritten or online Online due to volume of questionnaires which need to

be distributed in order to receive a significant response

Surveymoney.com & Survey gizmo.com will be used

Send to hr of a company with covering email so they can distribute it amongst

the whole organisation. Please forward this to any contacts you have.

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Set the questions under sections, that address each of those objectives so when I

pull it together it will be easier to analyse, by objective , what did my lit review say

, what did my interview say

6.4 Interviews with a sample of DAMIT SMEs

Interviews may take place face to face or at a distance, e.g. over the tele- phone or by

email. With three clearly identifiable styles of interview. they may take place at the

interviewees or interviewers home or place of work, in the street or on some other,

neutral ground as stated by (Macdonald and Headlam, 2008).

Source: (Macdonald and Headlam, 2008 p.40)

During a potential pilot interview different forms of questioning may be practised during

the interview. In addition to survey questioning, Dillon identified classroom, courtroom

and clinical questioning, as well as the domains of personnel interviewing, criminal

interrogation and journalistic interviewing (Dillon , 1990).

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To make this research more valid individuals who are higher up in the chosen companies

will be contacted first. If this doesnt work less senior members of staff will be contacted,

the following hierarchy of staff will be attempted to input into this study.

1. Managing Director

2. Director

3. Management staff

4. Research Team

The following will list names of people in serviced office providers and DAMIT SMEs

who are gatekeepers of the information relevant to justify the research:

Company: Regus Name : Rob Strachan, Dave Fensom, Marta Dahlia Position Managing Director UK, General Manager, Hr Adviser Contact: LinkedIn Company: MWB Business exchange Name : Cristina Tumino Position: General manager Contact: Linkedin Company: Citibase - lentabusinesscentres Name: Kasia J Position: Centre Assistant Contact: linkedin Company: Shoreditch Works Name: Jack Martin Position: Director of Strategic Operations Contact: Twitter Company: The office group Name: Head office Position: Not applicable Contact: 22@theofficegroup.co.uk Company: Search for serviced offices Name: Jamie Robotkin Position: Director Contact:Linkedin

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DAMIT SME contacts Compnay: Ref me Name: Andreas Pahler Position: Lead Backend Developer Conatct: Linkedin Company Name: Tech Hub Name: Elizabeth Varley Position: Co-Founder Contact: Linkedin Company: Institute of International Visual Arts Name: Website Position: Not applicable Contact: +44 (0)20 7729 9616 Company: Artuim Name: James Lock Position: Architectural Lighting Consultant Contact: +44 (0)20 7681 9933

See Appendix 2 p.24 for further potential contacts

6.5 Secondary

This includes a literature review which examines the key references that will be used in

conjunction with the hypothesis. Academic journals, Business reports and government

statistics referring to DAMIT SMEs and serviced offices will be a key component in this

area

6.6 Ethics

Ethical issues such as gaining access to a premises with the cooperation and consent of

the DAMIT SMEs and serviced office providers. Whilst dealing with the illegal, unethical

and unprofessional scenarios that may occur as argued by (Pimple, 2002).

Sampling and selection. Choosing the subjects or objects of your research.

Recording your progress. Keeping a close check on your data collection.

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The ups and downs of data collection. Enjoyment, loneliness and obsession.

Refer to Appendix 3 p.25 for ETHICAL REVIEW OF DIPLOMA/BSc

RESEARCH PROJECTS INVOLVING HUMAN SUBJECTS

6.7 Contingency

The questionnaire and interviews may receive a limited response, in this case a

contingency plan is in place, in this case the research conclusion will have to rely on

secondary sources to come to the hypothesised outcome.

The questionnaires and interviews may not be successful in obtaining the relevant quota

of information to justify the research e.g. 200 could get sent out receiving a 10%

response, in this case secondary research will have to be used to try and prove the

validity of the hypothesis. In this case the research conclusion will have to rely on

secondary sources to come to a valid conclusion.

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7.0 Scope & Limitations

The limitations of the research steams from the aspects of the investigation which are

hare not getting considered when analysing the subject area.

Why not look as any company that could is an SMEs? to narrow the scope of

the topic and focus on specifically DAMIT SMEs.

This subject area has limited academic journals.

Controlling the amount of variables, mentioning many different geographic areas will

distort the findings in the conclusion. This is why the location for this research has been

set to East London and the City of London. it should be considered that the Google

European Headquarters has been Located In Kings Cross North London, this is a driver

behind the take up in serviced office space by DAMIT SMEs. The impact that this could

have on DAMIT SMEs who are looking to alternative locations to pursue their growth

potential.

Time is a major factor that should be considered in this research as the project has a

deadline. To prepare for this a schedule should be produced to plan, how much time

should be spent on each specific section of the dissertation. See Appendix 4 p.26

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8.0 References

Atkin, B. and Brooks, A. (2009). Total facilities management. Chichester, U.K.: Wiley-

Blackwell.

Blackburn, R., Hart, M. and Wainwright, T. (2013). Small business performance:

business, strategy and ownermanager characteristics. Journal of Small Business and

Enterprise Development, 20(1), pp.8-27.

BNP PARIBAS Real Estate, (2014). MANAGED OFFICE SOLUTIONS. White

paper. London: BNP PARIBAS Real Estate, p.3.

Booty, F. (2009). Facilities management handbook. Oxford: Butterworth-

Heinemann.

Brchner, J., Olsson, H. and Sinik, D. (2004). Serviced offices: owner capabilities for

FM coordination. Facilities, 22(3/4), pp.74-78.

Cabinet Office, (2013). Making Government business more accessible to SMEs.

London: Gov.

Citibase, (2014). Annual Review. London: Citibase. pp55 - 61

Cityoflondon.gov.uk, (2014). SME growth popularises serviced offices - 2014 - City of

London. [online] Available at: http://www.cityoflondon.gov.uk/about-the-city/what-we-

do/media-centre/news-releases/2014/Pages/sme-growth-popularises-serviced-

offices.aspx [Accessed 29 Nov. 2014].

Department for Business Innovation & Skills, (2014). SME BUSINESS

BAROMETER. London: Gov. pp112-116

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Department for Business Innovation & Skills, (2014). Tech City: Future Fifty.

London: Gov. pp 9 -10

Dilon,J.T (1990). The Practice Of Questioning. London and New York,NY: Routledge

DTZ and Jones Lang LaSalle, (2014). City Offices Getting the Balance Right.

London: City of London.

Experian, (2012). Characteristics of SMEs and Social enterprises around tech city.

London: City of London Corporation.

Farebrother, (2014). The London Midtown Office & Retail Markets Q3 2014. London:

Farebrother, p.13.

Foord, J. (2013). The new boomtown? Creative city to Tech City in east London. Cities,

33, pp.51-60.

Harvey, B. (2012). Your Complete Guide to Serviced Offices. Bristol: Colston Office

centre.

Hirst, C. (2011). Ethics and Professional Conduct for Chartered Surveyors. Coventry:

Rics Books.

HM Treasury, (2014). SME Credit Data. London: HM Treasury. pp 201 - 104

Hood, D. (2013). Competitive SME. London: Kogan Page. pp 72 -78

Instant, (2011). Global Serviced Office Review 2011. London: Instant. pp 45 - 64

Jones Lang Laselle, (2014). The Central London Market Q1 2014. London: Jones Lang

Laselle.

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Knight Frank, (2014). CENTRAL LONDON QUARTERLY OFFICES Q3 2014.

London: Knight Frank, p.4.

Knight Frank, (2014). London Office Market Analysis Q2:2014. London: Knight

Frank, pp.8,12, 18.

London Enterprise Panel, (2014). 2014-2020 European Structural & Investment

Funds Strategy for London. London: European Union.

Macdonald, S. and Headlam, N. (2008). Research methods handbook. Manchester:

Centre for Local Economic Strategies.p17

McAllister. P, (2001) "Offices with services or serviced offices? Exploring the valuation

issues", Journal of Property Investment & Finance, Vol. 19 Iss: 4, pp.412 - 426

Meadwell, S. (2014). Serviced offices: how the other half works. [online] Egi.co.uk.

Available at: http://www.egi.co.uk/news/serviced-offices-how-the-other-half-

works/?keyword=serviced%20office%20london [Accessed 29 Nov. 2014].

Nathan, M. (2011). East London Tech City: Ideas without a strategy?. Local Economy,

26(3), pp.197-202.

O'Mara, M. (2010). Don't try this at home: You can't build a new silicon valley just

anywhere. Foreign Policy, 181, 149-151.

Pimple, K. (2002). Six domains of research ethics. SCI ENG ETHICS, 8(2), pp.191-

205.

Pratt, A. and Hutton, T. (2013). Reconceptualising the relationship between the

creative economy and the city: Learning from the financial crisis. Cities, 33, pp.86-95.

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Ramidus Consulting Limited, (2014). Serviced Offices and Agile Occupiers in the

City of London. London: City of London Corporation. pp 92 -115

Regus, (2012). Regus plc Annual Report and Accounts. London: Pureprint Group. p 49

Saunders, M., Lewis, P. and Thornhill, A. (2012). Research methods for business

students. Harlow, England: Pearson.

Savills, (2014). City Office Market Watch. London: Savills.p 2 -3

Sayce, S., Eccles, T. and Plimmer, F. (2014). Handbook on Research Methods.

London: Kingston University.

Taylor. M ,and Murphy. A (2004) "SMEs and ebusiness", Journal of Small Business

and Enterprise Development, Vol. 11 Iss: 3, pp.280 289

Vrensen, H. and Kuljanin, M. (2014). Office: TMT explosion. [online] IPRE.

Available at:http://realestate.ipe.com/markets-/sectors/office/office-tmt

explosion/10003345.article [Accessed 29 Nov. 2014].

Wisker, G. (2009). The undergraduate research handbook. Houndmills, Basingstoke,

Hampshire [England]: Palgrave Macmillan. Pp 72 - 83

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Appendix 1 Poster

23

Appendix 2 further contacts

24

Appendix 3 Ethics

ETHICAL REVIEW OF DIPLOMA/BSc RESEARCH PROJECTS INVOLVING

HUMAN SUBJECTS

To be completed by the student FORM REO1

Student:

Project Supervisor:

Degree Programme:

Year of Study:

Project Title:

Start Date: Completion Date:

Aims/Objectives of Project:

Briefly describe the Project: (Stating where it will take place, whether it will involve interviewing, observing or assessing human subjects).

Please give this form to your Supervisor before completing form RE02 together.

25

CHECKLIST FOR ETHICAL REVIEW OF DIPLOMA/BSc RESEARCH PROJECTS INVOLVING HUMAN SUBJECTS

To be completed by the Student and Supervisor together FORM REO2

Please indicate your responses

Y (Yes) N (No) NA (Not Applicable) "

Please enter further information

1 Is this project to be undertaken by one student?

Name of student

2 Is this project to be undertaken by a group of students?

Names of students

3 Is partnership/collaboration with another institution involved?

Name of institution

4 Has another Ethics Committee scrutinised the project?

Ethics Committee & date of scrutiny

5 Could any situation of risk or insurance claim arise during the project?

Sources of risk

6 Have actions been taken to minimise foreseeable risks?

Actions taken

7 Have approaches to selection of participants/respondents been identified?

Approaches taken

8 Has accountability for obtaining informed consent been addressed?

Name of person responsible

9 Have information sheets/informed consent forms been developed?

Brief details

10 Will participants experience psychological, social or physical discomfort?

Brief details

11 Have actions been taken to reduce risk of discomfort?

Actions taken

12 Does the project involve the use of specialist techniques?

Techniques involved

13 Have any training needs been identified for the student?

Brief details

14 Has the student been referred to relevant professional guidelines?

Source of guidelines

15 Have actions been taken to safeguard data confidentiality & anonymity of participants?

Actions taken

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Appendix 4 Dissertation schedule

Objectives Approximate Duration

Sep-14Apr-15

WeeksDays

22-2930-67-1314-2021-2728-34-1011-1718-2425-12-89-1516-2223-2930-56-1213-1920-2627-23-910-1617-2324-23-910-1617-2324-30

31-6Dissertation Proposal lectures

1391

Relevant reading10

70Dissertation proposal

749

Hand in dissertation proposal19/12/2014

Addition relevant reading 6

42Make layout

214

Chapter 1:Introduction 2

14Chapter 2:Literature Review

535

Interviews2

14Questionairres

321

Chapter 3:Primary Research4

28Writing Chapter 4:Conclusion

214

Proof reading dissertation1

7Referencing / Bibliography

17

Hand in date dissertation03/04/2015

Mar-15Oct-14

Nov-14Dec-14

Jan-15Feb-15

27

Acknowledgments