Why Businesses Move – 24.07.2012

A recent survey carried out by prestigious business consultancy McKinsey Quarterly discovered a varied - and occasionally unexpected - range of reasoning behind trans-national corporations’ desire to shift staff and assets.

With over 75% in agreement, it seems the prime motivating factor for relocating office space was the possibility of opening up new centres in fast growing markets, with feet on the ground still more likely to draw in sales than distance marketing alone. This correlates with the findings of Search Office Space who have seen an increase in the desire for companies to locate themselves physically within the vicinity of resources and competitors despite the increased reliance on digital communications.

The majority of companies surveyed suggested that any substantial move would take place on the country-wise, rather than an inter-city level. However, of those who chose to expand within their homeland, an overwhelming 80% suggested that the move was not precipitated by the desire to reduce materials and labour costs. The most frequent response given as a prime factor in the decision to relocate among skilled industries - such as pharmaceuticals - would be access to a broad talent pool, suggesting that businesses are beginning to focus more on growth than cutting costs. There are exceptions however; for the manufacturing industry, the top motivational factor behind relocating is still the reduced cost of manufacturing in foreign centres.

On a national level, most of the executives surveyed suggested that their main focus when choosing a city was the long term development of the urban conurbation, with improvements in infrastructure (34%), education and industry presence (30%) placed well above shorter term and political motivations such as real estate markets (22%) and financial incentives (14%).

The one constant underlying theme to movement in all industries is the requirement of a competent and well equipped group of administrative staff who can be housed immediately in serviced office space within the immediate vicinity of production units – which is where Search Office Space comes in.

Motivational factors behind relocating office space:

1. 78% - Reach new markets or customers
2. 15% - Reduce costs for managers or back-of?ce functions
3. 17% - Reduce logistics costs
4. 19% - Reduce manufacturing costs
5. 14% - Better access to knowledge or recruiting opportunities
6. 5% - Better access to raw materials