Office Expansion for start-ups: a look at the office market through Porter´s Five Forces
January 29 2008 | 0 comment(s)
As some of you may know, the GSC is growing and therefore needs new
office space. I have had the luxury of experiencing something that most
entrepreneurs must face- the dreaded office search. I am now convinced
the way to make money in London is to rent offices, which the following
- slightly humorous - analysis of that office-real estate market shows.
Supplier Power: High, Buyer Power: Low
Firstly,
and most importantly, there is no clarity of search in London. Here
there is no central location you can turn to in order to see everything
that is available in the market...so they have created a high "buyer´s
burden". I´ve spoken with at least fifteen letting/leasing agents and
have no good indication that I have seen most of the options that are
available to us.
Competition: High, Substitution: Low
Unfortunately
we´ve been told that we are looking for space at the wrong time.
Because the forecast for the economy is poor a lot of companies are
breaking their long term leases and renting short term "plug and play"
offices. These ready to move in offices are serviced so the hassle
factor is low...but as we all know, when services are involved the
flexibility is increased but the prices skyrocket. As we grow we need
the flexibility and can no longer work from London Business School (or
out of our garages!)...so substitution options are low.
Barrier to Entry: High
If we had the money we would enter this market
I
know this post is a bit unusual but we just wanted to say to all of you
out there who have been through this stage of office expansion--we feel
your pain.
We´d be interested to hear from any of you. How much of a burden/time spent is office expansion for a start up?
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