The Mail on Sunday
Start-ups priced out of City hub
By Vicki Owen
Technology start-ups are being priced out of London’s ‘Tech City’, according to commercial property agent DeVono.
Technology, media and telecommunications companies, deterred by high rents in Clerkenwell, Farringdon and Old Street – the core Tech City locations in the City of London – are now considering Hackney in East London as their preferred location, where rents are considerably lower.
DeVono, which acquires offices for companies, says interest in Hackney has doubled in nine months and believes rental levels have doubled in ‘prime Tech City locations’ in the past two years.
DeVono director, Adam Landau, said: ‘TMT companies are a victim of their own success, in that they have raised rents in Clerkenwell and Farringdon, previously the more affordable alternative to the West End and City. Start-ups and small firms simply cannot afford to be located in the very areas of London that have been designed to supposedly house them.
‘Landlords aim to achieve the highest possible rents and this has a direct effect on the next wave of entrepreneurs, who are now looking in Hackney.’
The Mail on Sunday
SMEs should join forces and share secrets to slash 15% off rising rent bills
By Vicki Owen
Small firms are being urged to join forces to negotiate lower rents to save themselves as much as 15 per cent on their rental bill.
‘The sad reality is that businesses are paying between ten and 15 per cent more than is necessary in rent,’ says Adam Landau, a director of Central London-based commercial property agent DeVono Property.
He says that this may be because they have never asked for a reduction or do not have enough knowledge about rents in the local area.
He encouraged firms to share what might be seen as commercially sensitive information, such as how much rent they pay and other ‘hidden’ costs levied by landlords, to put them in a better position to argue for a reduction.
The Forum of Private Business says it is not aware of landlords and estate agents being more willing to negotiate in the current economic climate.
However, with rents expected to increase over the next five years, Landau says firms must try to ‘lock in’ to a lower rate if they are about to start a new lease.
Longer leases are usually subject to a review every five years. At the time of review, landlords will usually ask their advisers to tell them about new deals on offices in comparable buildings to see by how much they can raise the rent. Landau suggests renters also share information on existing tenancies to get a better deal.
The Law Donut, a legal website for business owners, goes a step further and suggests firms in shared premises consider negotiating jointly with other tenants. If talks become acrimonious it recommends involving a solicitor.
Save Whitstable Shops is one example where firms have joined forces to combat rent increases. The Kent network was set up after some retailers were hit with rent rises of between 80 and 100 per cent last year.
Brian Hitcham, who runs Oxford Street Books and is involved in the campaign, says landlords, agents and retail chains are getting better at sharing information.
But Landau feels that it is still not happening enough. ‘There is an opportunity for businesses to fight back,’ he says. ‘They need to know they can negotiate rents in their favour and know it is OK to walk away if they cannot be agreed at the correct levels. There will be another office to choose from. They need to know rents are negotiable with the right market knowledge.’
He also says that those moving premises should watch out for hidden costs, such as Stamp Duty Land Tax, surveyors’ and legal costs associated with getting a landlord’s approval for alterations, obligations on repairs referred to as ‘dilapidations’, service charge increases and refurbishment fees.
Other charges to take into consideration are fees for gaining a landlord’s consent to sub-let part of a space, VAT, business rates and letting agents’ fees.
Landau also warns firms to be wary of property companies, that usually represent the interests of landlords.
He says: ‘How can a property company on the one hand try to achieve the highest value possible for their landlord clients, then on the other hand claim to represent tenants with exactly the opposite aim of lowering rents?
‘There are very few companies representing only the interests of the firms seeking premises.’
The Mail on Sunday
Small firms grab largest share of Games billions
By Vicki Owen
Small businesses are expected to account for more than half of a multi-billion pound boost to the economy as a result of the Olympics coming to Britain.
Official sponsor Lloyds TSB says the Games will have brought £16.5billion to the UK between 2005, when they were awarded to London, and 2017. Construction is expected to generate £13.5billion and tourism £2billion.
Lloyds found that £8.06billion - 52 per cent of the uplift from construction and tourism - will be delivered by small and medium-sized firms, including taxi drivers, restaurants and suppliers. London is expected to deliver £6billion and other parts of the UK the remaining £10.5billion.
David Cameron says he expects the Games to bring in £13billion in the next four years alone.
During the six weeks from the start of the Olympics to the end of the Paralympics, the British Business Embassy, which has been set up by the Government's export agency UK Trade & Investment for the Games, will host 17 global business summits at Lancaster House, central London, to connect companies with investors and drum up business for Britain.
However, concerns that disruption over the Games could drive business from some firms remain and there has been criticism that firms out of London feel detached from potential benefits.
The Federation of Small Businesses has warned that the Olympic legacy could be a damp squib for small firms and could have been far greater if the Government had not been so intent on protecting headline sponsors.
But Lawrence Mallinson is one entrepreneur who has already benefited from a boost to his firm. He is the boss of James White drinks in Ashbocking, near Ipswich, which he took over 24 years ago. At the time it was a cider-maker but was struggling to survive and had been turned down for finance by the banks.
Now a juice-maker, its new product, a beetroot juice called Beet-It, is being requested by athletes at the Games. Teams from Norway, Canada, Australia, Britain, New Zealand, the Netherlands and Belgium have ordered supplies.
Lawrence, 54, an accountant and a founder of the New Covent Garden Soup Company, says: 'When we first did beetroot juice I thought it was a very small market. Yet last month we had sales of £56,000 for the 2½fl oz [70ml] concentrated shots alone, fuelled by the Olympic teams.
'The shots now account for about ten per cent of the business, while Beet-It accounts for half of the £5million turnover.'
And while London's commercial property market is expected to come to a virtual standstill during the Games, one agency has set its sights on the wealth of international business opportunities the event promises to bring.
DeVono Property currently finds and acquires offices for British firms moving into central London, where it is based. It intends to use the slowdown to steal a march on its competitors.
Director Adam Landau, 33, who founded the agency in 2003 with co-director Robert Leigh, also 33, anticipates a 30 per cent jump in its client base and expects to turn over £2.5million this year.
He says: 'We've had our Olympic strategy in place for months. We know who's coming and have meetings arranged. These include a number of fast-growth, technology-related firms from the US that typically aim to expand their workforces fivefold within two or three years and are looking at overseas investment.
'We are a local company that has never had a global presence, but thanks to a high-profile event like the Olympics, we believe that is about to change.'
• Small firms are being urged to consider the legal ramifications of marketing around the Olympics, especially during the blackout period from July 18 to August 15 when the Games' suppliers are not allowed to advertise the fact unless they are official sponsors. Karen Hensman, head of Bristol-based intellectual property adviser Innovate IP, says: 'They risk a hefty fine, of an order that could put smaller firms out of business. The London Organising Committee has said that it will ruthlessly enforce the regulations. 'You need to be imaginative in your approach. If you use any representation likely to suggest an association with the Games, including rings, motto, words or phrases without authorisation, you may be infringing the Olympic Association's rights.' She says the dos and don'ts are clear but that many smaller firms are unaware of their existence.