UK: SUCKERS FOR THE CITY - FOR SOME BUSINESSES A CITY CENTRE ADDRESS IS A COSTLY MUST.

UK: SUCKERS FOR THE CITY - FOR SOME BUSINESSES A CITY CENTRE ADDRESS IS A COSTLY MUST. - Everywhere you look businesses are decamping and moving out of city centres, citing high rent as one of the principal reasons why. For many, the trend makes obvious

by
Last Updated: 31 Aug 2010

Everywhere you look businesses are decamping and moving out of city centres, citing high rent as one of the principal reasons why. For many, the trend makes obvious sense: modern telecommunications mean that a base in Uxbridge, say, can provide all the convenience of central London at a fraction of the cost. But there are certain firms that would claim not enjoy this option, for whom a pricey location is an inescapable fact of life. Or do they deceive themselves?

Certainly, it is difficult to imagine a major merchant bank far from the City, and many ad agencies like to be within a stone's throw of Soho.

'You have to think about location very hard. Most companies could work outside London, but employees and relationships with nearby businesses must be considered,' says Richard Pugh, managing director of Location Strategy Management. 'City firms could find this difficult.' Barry Blundell, a senior consultant at Relocation Information Services, feels that that a perceived need may also be 'a practical need to be located in the area which is recognised as the one for your services', Of course, he adds, many organisations, including government departments, have no tie to any particular geographical location.

Martin Smith, managing director of Bartle Bogle Hegarty, gives three reasons why the advertising agency should remain in Soho.

'First there's a birds-of-a-feather attitude, people feel comfortable in certain areas. Second, ad agencies want young, bright people who often work late and want to go to a bar or club after work. Outside W1 you can't do that. Finally, most of the production and post-production houses are in Soho. Creatives at suburban agencies spent half their time out of the office.'

The big accountancy firms have a similar attitude towards the City. Firms operating in London, says George Westropp, a partner in Deloitte & Touche, 'must, absolutely must, be in the City of London or very close to it.

Our biggest clients in terms of fees are the City and in government, so Fleet Street is ideal. There's something about being in the City which is alluring to ambitious people and the atmsophere is completely businesslike.' Major law firms with important clients in the City are in the same position.

'I can't envisage a move to Docklands or Hammersmith,' says Freshfields' marketing manager, Dominic Leahy. 'After 250 years in the City, with all the banks and corporations, it still makes sense even if rents are high.'

Nevertheless the Docklands, for example, has attractions that the City cannot match. 'The key constraint for a bank is the availability of the right building, with the space to create trading floors,' argues John Godfrey of Lehman Brothers. 'The City has these types of building, so does Canary Wharf. Initially people were unwilling to go to Canary Wharf but now it's coming to have the same ethos as the City.'

There will always be those who buck the trend. A gradual drift might eventually develop into a wholesale migration. But for a lot of businesses there clearly is no substitute for being at the heart of things. A lower rent would for them be a false economy.

Find this article useful?

Get more great articles like this in your inbox every lunchtime