Being of Service - serviced offices are a vital cog in the Mayfair business machine...
16 March 2010

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Serviced offices are a vital cog in the Mayfair business machine, but one of the major operators still wonders why some businesses don't recognise the benefits - Duncan Lamb reports for the Mayfair Times (March)

 

Peter Allport is a perplexed man. The Chief Executive of the Executive Offices Group, widely acknowledged as the person who pioneered the serviced office concept in the UK, still cannot fathom why so many businesses would source their offices via the traditional route of a long lease and then have to sort out all the other challenges such as IT, telephony, office furniture, meeting rooms, etc.

If you suggest to him that the one-stop shop approach to sourcing offices, where all costs are rolled into one charge, is expensive, his rebuttal is swift and detailed. Using the example of a customer with a "six-desk requirement" he runs through the costs involved in taking the traditional leasing route and then compares them with the cost of taking the same space in one of EOG’s serviced office centres. The projected cost saving, he concludes, could be as much as £100,000 per year.

That the figures are at his fingertips is hardly surprising. Allport has been running serviced office centres since 1982 and today EOG has 35 centres, most of which are clustered in central London.

"Business plans are almost always guaranteed to be inaccurate and businesses have to be able to respond to that. Therefore leasing a fixed amount of space for at least five years can be risky," he says.

"Our flexible approach enables companies to lease the amount of space they need immediately and subsequently tailor the amount of space and length of stay to suit their changing needs."

Despite the compelling nature of the cost comparison, he insists that what his business offers is not just about price. "What we help businesses do is manage change and operate more efficiently," he says. "That is about providing solutions, not just delivering cost and time savings. "The customer will remember the solution long after the price is forgotten." Given the immediacy of the business – "We can have a customer fully operational in four days" – serviced offices are a good bellwether of the economy.

Reflecting on the economic turbulence of the past two years, Allport says that business has been resilient: "For example, in 2008 we experienced a much higher level of churn – customers coming and going – but by the end of the year we had posted a record volume of lettings."

 

Encouragingly, he also reports that activity has been steadily on the increase during the past four months: "We’re the first to spot the coming of a downturn but also the first to see when things are improving."

Just over a year ago, the business took a significant step forward when it was selected by Grosvenor to operate four serviced office centres in Mayfair and Belgravia at 28 Grosvenor Street, 67 Grosvenor Street, 52 Brook Street and 52 Grosvenor Gardens. The partnership seems like a good fit. EOG is discreet to the point of self-effacement. Even though it operates four types of centres – Argyll, Palladia, Grosvenor and Corpnex – these simply define the different products on offer to the customer.

You’ll not find any branding at the centres. As a result, there is no culture clash between Grosvenor and its partner. Last month, when the refurbished 67 Grosvenor Street was launched, Lauren Buck, investment director at Grosvenor, commented: "Serviced offices are a key growth area for our portfolio. Our relationship with EOG has proved very successful over the past year, allowing our clients to manage their businesses, while we manage their office space and reduce the everyday hassle often associated with it."

 

Allport clearly sees the Grosvenor Street centre – which launched with 20 per cent of its space prelet – as, in many respects, the shape of things to come. The feel of the reception area is unmistakably that of a boutique hotel rather than a soulless office building. This is perhaps not surprising as he looks more toward the hotel business than the property sector for inspiration. "We’re a service company with a property portfolio attached," he says. "Many of our centre managers formerly worked at five-star hotels. They like working for us because they get to go home at night."

It is the level and quality of service that is pivotal to the business. With more than a third of new business coming from referrals, it is imperative to get the service right so that an existing customer will make a recommendation to a potential customer.

Focusing on customer service is not something that characterises the mainstream commercial property sector, but Allport is clearly not a typical property man. During the interview, he quotes from Leonard Cohen to illustrate a point about negotiation ("Forget your perfect offering/ There is a crack, a crack in everything") and shows the greatest enthusiasm not when he’s talking about his buildings but when he’s discussing the 250-strong EOG workforce. "The best part of my job is watching people develop," says Allport, "seeing what they can achieve and what they contribute to the business. We have 27 languages represented amongst the workforce – it’s an amazing resource for us internally".

But when it comes to communicating to the outside world, his passion for customer service remains undimmed. "When I started talking in property circles about treating tenants as customers and delivering customer service, I would get laughed out of the room," says Allport. "I said then that there will be a time when the tenant is king – and that time is certainly now."

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