SMALL BUSINESS & CUSTOMER RESEARCH UPDATE Matthew James Research Manager Thursday, 7 th June 2007

OVERVIEW SME Update Customer Survey Exit Survey Churn indicators Key relationships

SMALL BUSINESS TRENDS

37% OF TOTAL GVA “London and the South East make a disproportionately heavy contribution to economic activity. In 2005, these two regions accounted for 37% of the goods and services (measured by GVA) produced in the country, even though only 30% of the working age population lived in this area.” MIX OF BUSINESS ACTIVITY “However, the economies of London and the South East stand out not only because of their scale, but also in terms of the mix of business activity. The industrial composition of output is noticeably different to that found elsewhere in England & Wales, particularly in the case of London.” LONDON’S CONTRIBUTION Source: Barclays Business Customer Economic Focus, Jan 2007 SMALL BUSINESS TRENDS

VAT REGISTRATIONS Source: Regional Competitiveness and State of the Regions, DTI, May 2007 NB: Great Britain & Northern Ireland 179,000 SMALL BUSINESS TRENDS N

BUSINESS STARTS SMALL BUSINESS TRENDS % Source: Global Entrepreneurship Monitor, 2006 NB: Great Britain & Northern Ireland

REGISTRATIONS & DE-REGISTRATIONS SMALL BUSINESS TRENDS % Source: Regional Competitiveness and State of the Regions, DTI, May 2007 NB: Great Britain & Northern Ireland

BUSINESS SURVIVAL RATES SMALL BUSINESS TRENDS Source: Regional Competitiveness and State of the Regions, DTI, May 2007 NB: Great Britain & Northern Ireland Year of business start

At end of 2005 – 4.342m Source: Small Business Service, 2006 NB: Great Britain & Northern Ireland EFFECT ON UK BUSINESS STOCK SMALL BUSINESS TRENDS

REGIONAL SPLIT Source: Small Business Service, 2006 NB: England ONLY SMALL BUSINESS TRENDS

LONDON BUSINESSES Source: Small Business Service, SME Statistics, 2006 NB: ALL EMPLOYERS IN LONDON=164,555 SMALL BUSINESS TRENDS

ANNUAL CUSTOMER SATISFACTION SURVEY

CONSIDERATIONS What are the key issues & areas for improvement? What are the actions? What are the key relationships? What do customers expect of Workspace? Do we deliver? Is there anything we don’t know but should? CUSTOMER SURVEY

CUSTOMER SURVEY: AIMS 1. Demographics 2. About business premises 3. Contact & communications 4. Assessment of brand values 5. Business performance

CUSTOMER SURVEY RESPONDENT DEMOGRAPHICS 551 Response rate (390 paper, 161 online) – down on 677 in % operate in creative industries or professional services More than 60% have occupied their current unit for less than 2 years More than 80% employ less than 10 people More than 50% have been trading for longer than 5 years

CUSTOMER SURVEY BUSINESS TYPE %

ABOUT YOUR PREMISES CUSTOMER SURVEY Cost & location remain most important factors in taking space 87% are satisfied with local service “It feels like a personal service - very good & friendly” “This is not a criticism of the staff (who are very good) but the standard of lift maintenance is appalling and needs to be addressed.” 80% would recommend current business premises

LOCAL CONTACT WITH WSG CUSTOMER SURVEY Consistently high year-on-year and consistent across the portfolio

CUSTOMER SURVEY SERVICE ISSUES

WORKSPACE VALUES CUSTOMER SURVEY

RESPONSIBLE COMPANY CUSTOMER SURVEY

SATISFACTION WITH… CUSTOMER SURVEY SERVICE 87% are satisfied with the service they receive from Workspace “ Very quick & efficient – always a friendly voice at the other end of the phone ” COMMUNICATIONS 93% are satisfied with communications from Workspace “Newsletter is good - nice to know what's going on. Idea of TradeLink is excellent”. WORKSPACE AS A LANDLORD 91% are satisfied with Workspace as a landlord “The service is fuss free which for small businesses is ideal. We receive a friendly service from the landlord and its staff. It’s a pleasure to be here.” 82% WOULD RECOMMEND WORKSPACE; 6% WOULD NOT

CUSTOMER BUSINESS OUTLOOK

CUSTOMER PERFORMANCE CUSTOMER SURVEY Source: NatWest/SERT Quarterly Survey of Small Business in Britain, Q N=538

CUSTOMER PROSPECTS CUSTOMER SURVEY Source: NatWest/SERT Quarterly Survey of Small Business in Britain, Q N=538

BUSINESS OUTLOOK Increasing competition (26%) and increasing business costs (20%) are seen as the biggest challenges facing customers Access to customers, location in relation to key contacts and ‘kudos’ of London address cited as most popular reasons for being in London 21% think they will benefit from the 2012 Olympics, and a further 25% are unsure Those that will benefit will do so either directly or indirectly. Directly by winning business arising as a result of the Games Indirectly by the availability of projects normally taken by those involved in the Games CUSTOMER SURVEY

EXIT RESEARCH

AIMS EXIT RESEARCH 1. What proportion leave the portfolio & what proportion move within it 2. What types of businesses are leaving the portfolio 3. Why businesses leave the portfolio 4. Levels of satisfaction with Workspace 5. What tenants think of Workspace AIMS: 60 interviews completed each quarter

SUMMARY OF FINDINGS EXIT RESEARCH Over the last five surveys, on average 20% move to other WSG properties each quarter The number of tenants moving to another estate or business premises with a different landlord is about 50% No pattern by industry type, but the smallest at most risk 50% had been in their current premises for between one and three years 88% see their local manager or Workspace representative at least once a week

SUMMARY OF FINDINGS EXIT RESEARCH Main reasons for leaving is COST - average is 38% On average 25% have experienced a service issue, but less than 10% said it contributed “a lot” to their decision to leave 95% believe experience has lived up to expectations… BUT, seemingly low expectations. What makes a good landlord (unprompted): Give a good service27% Listen to tenants22% Don’t know 23% Charge fair rents18% Be helpful/friendly12%

KEY RELATIONSHIPS > Those most likely to recommend are those who: 1. Agree that Workspace provides good value for money 2. Are satisfied with the contact at local level 3. Agree that Workspace delivers a competitive package 4. Are satisfied with Workspace Group as a landlord 5. Agree that any service issues have been resolved quickly SUMMARY

CONSIDERATIONS What are the key issues & areas for improvement? What are the actions? What are the key relationships? What do customers expect of Workspace? Do we deliver? Is there anything we don’t know but should? SUMMARY