Office Space Profits Take-Off at Vision Point, Dudley.
MSO Workspace Successfully Launches Vision Point
Kenmore Property Group purchased the 45 acre, 800,000 square feet Vaughan Trading Estate in Tipton, Dudley on behalf of Dudley Unit Trust in 2006. Vision Point comprises a 36,500 sq ft office block on the estate which had been ancillary to the adjacent industrial buildings, but which Kenmore planned to let separately in order to improve cashflow from the premises.
With its track record of transforming empty or underutilised commercial office space into revenue generating assets, Managed Serviced Offices Limited (MSO Workspace) was ideally positioned to assist Kenmore.
Kenmore’s objective was clear: “Make Vision Point profitable.”
With its location close to excellent motorway and public transport links, free on site parking and proximity to Birmingham City Centre, Kenmore knew that Vision Point had potential.
In March 2007, MSO Workspace was approached by Paul Jarvis, Director of UK Asset Management at Kenmore, to conduct an initial feasibility study to investigate how Vision Point could generate more revenue.
At that time, Vision Point was a typically underutilised, underperforming commercial office block in the industrial heartland of the West Midlands in need of a new vision: It was characterised by utilitarian décor, dwindling occupancy with net rents as low as £4 per square foot, and only 10 out of a possible 26 offices were occupied.
MSO Workspace initially reviewed the local competition and evaluated the centre’s potential markets in and around the Dudley area. The local market place was price led and over 75% of the office enquiries received by other business centres in the area confirmed this. MSO Workspace identified a gap in the market for high quality, sensibly priced, all inclusive fully serviced office space – especially in the sub £200 per workstation price range. The financial analysis and modelling carried out by MSO Workspace also confirmed that a significant and positive impact on the profitability at Vision Point could be achieved.
MSO Workspace recommended repositioning Vision Point as a value for money Business Centre offering serviced offices and meetings rooms at an exceptionally competitive price.
Kenmore was impressed with the depth of the initial consultancy and feasibility study and accepted the recommendations made by MSO Workspace, instructing them to proceed with their Business Plan. The contract to refurbish Vision Point was extended to give MSO Workspace full responsibility for marketing the serviced office space and to manage the entire Business Centre.
To achieve 100% occupancy MSO Workspace had to deliver an outstanding serviced office solution. Simply re-creating a “me-too” low-budget serviced office was never an option. It had to deliver a significantly superior offering at a better price than competitors.
The MSO Workspace concept involved refurbishing Vision Point to a higher standard than local competitive schemes but pricing it so that it would appeal to price sensitive, cost conscious tenants.
To improve the image of the building and transform it into a desirable Business Centre offering fully serviced offices and meeting rooms, interior designers were commissioned to modernise the main entrance, reception and breakout areas. All other common areas were also given the same treatment.
In Phase 1, almost 17,000 sq ft of office space comprising 26 offices, ranging in size from 170 sq ft to over 2500 sq ft, and housing between 1 and 33 workstations, were modernised to take full advantage of the large windows and natural light. The ICT infrastructure was overhauled to meet the demands of modern businesses and a VOIP telephone system was installed. This would offer occupiers a range of enhanced telephony services and generate additional revenue. New furniture, large plasma screens and tasteful modern art completed the refurbishment – Vision Point was ready for business.
Modern, fully equipped meeting rooms with the capacity to accommodate up to 60 delegates were also created within the scheme. These would generate additional revenue and the competitive pricing and incredible overall value compared to local competitors, including hotels, would ensure high occupancy.
In January 2008, the transformation of Vision Point into a 17,000 sq ft modern Business Centre, offering serviced offices and meeting rooms was completed. Commenting on the successful completion, Paul Jarvis, Director of UK Asset Management at Kenmore said, “MSO Workspace completed a successful transformation within the confines of a tight capital expenditure budget.”
As well as project managing the re-fit and refurbishment, MSO Workspace was also actively promoting Vision Point to prospective occupiers – however, its approach was equally innovative.
Typically, serviced office space is promoted using undifferentiated promotional methods. Usually this involves listing the property on a number of broker sites and other free listing sites. There will usually be some advertisement in the local business press, some supporting editorial and even a direct mail campaign targeting companies that have registered an interest in property in the area. However, all of these activities are very passive.
The need to promote the property by listing it on intermediary office space search-websites is accepted, but there are still many factors that are beyond the control of the property owner listing the property including search location, competitive properties, the motivation and the sales skills of broker personnel to secure a viewing.
The MSO Workspace marketing strategy was designed to by-pass the regular, established, “me-too” strategies of competitors.
Although the tools were familiar, the execution was differentiated by its purpose and commitment: Pre-launch activities comprising measurable publicity and lead generation campaigns supported by a dedicated website that communicated the core proposition and offers. Post-launch activities including targeted telemarketing and proactive accompanied viewings.
The result has been that in only 8 months, there has been an increase of 444% in rental income compared with the inherited sum. Additional services including meeting rooms, data, telephones, catering and others will also add significant revenue as tenants settle in and start to make full use of all the facilities and services available.
Congratulating MSO Workspace on achieving 100% occupancy, Paul Jarvis said, “MSO Workspace is committed and get good results.”
However, MSO Workspace wasn’t satisfied with just achieving 100% occupancy, it identified and worked prospective occupiers which could become key anchor tenants to form the base of a solid ongoing, secure rental income. This approach has led to clients signing up for longer than the usual flexible office term, up to 3 years in some cases.
Summarising the MSO Workspace approach, Steve Lyons, Managing Director of MSO Workspace explained, “We strive to create a true win:win situation where clients can transform their underutilized or underperforming commercial property space into a revenue generating asset, and occupiers can find the best possible serviced office at the most competitive, all-inclusive rate.”
Not content with the success of Phase 1 at Vision Point, MSO Workspace are poised to begin the transformation of Phase 2 which comprises an additional 10,000 sq ft.
Year 2 will produce higher returns as full occupancy allows the additional service revenues to be promoted whilst increasing profit at the same time.
Year 3 will see a dramatic increase in revenue as some historically very low rents are ceased and new tenants replace them.
As Paul Jarvis summed up, “Kenmore Property Group is very pleased with the contribution MSO Workspace made to the transformation of Vision Point. The Business Centre has commanded a presence in the market within a very short space of time with a fully serviced office and meeting room offer. I believe we will commission MSO and its turnkey solutions in the future.”
About Kenmore Property Group
Kenmore Property Group is a co-investing, trading and development property and fund management group active in commercial markets within the UK, Europe and Middle East.
The group invests in properties that provide added-value opportunities on an asset by asset basis through joint venture vehicles, and development opportunities that have strong market demand.
Based on cost value, Kenmore manages in excess of £2.0 billion of investments in its markets together with a development pipeline of approximately £1.5 billion.
About Managed Serviced Offices Limited (MSO Workspace)
MSO Workspace is a young and innovative business with a proven track record.
The unique approach employed by MSO Workspace enables the owners or occupiers of underutilised, underperforming or empty commercial property space to transform their space into a revenue generating asset.
MSO Workspace achieves this by project managing the turn-key conversion of the space into fully managed serviced office space. Marketing the offices to maximise occupancy and then taking operational responsibility for the day-to-day management of the Business Centre.