There seems little to link the property business with the latest generation of telecommunications equipment but technological change often has an impact far beyond its immediate sphere of influence.
Advances in switching technology are creating a problem for property directors in every established telecoms operator in the world. AT&T of the US, British Telecommunications, Deutsche Telekom, France Telecom: they all have too much expensive space for the needs of their businesses.
The continued miniaturisation of electronic components means that equipment which once filled a purpose-built building can now be squeezed into a fraction of the space. The reduction in size is already between 50 per cent and 60 per cent and it is set to continue while the emphasis in telecoms shifts from voice to data transmission.
Voice switches, themselves a fraction of the size of their equivalents of only a few years ago, are giving way to data switches, smaller, simpler to install and less demanding in terms of environmental conditions.
This phenomenon is releasing huge amounts of floor-space. It is not always economical or practical to convert telephone exchanges to other uses. Alan White, property director for BT, points out that the costs of relocating the infrastructure are invariably enormous.
Nevertheless BT, which spends some £800 million sterling a year on its global properties, is disposing of costly city properties, selling off one property in Houndsditch, east London, to provide 200,000 sq. ft of office space, and another in Farringdon Road, near the City, which will provide 300,000 sq. ft.
Mr White says that over the past seven years, BT has cut its property costs by 30 per cent and the size of the portfolio by 25 per cent, equivalent to 20 million sq. ft.
"A core portfolio is owned or held on 10-15 year leases. We concentrate on providing the best facilities within these key buildings," he says. "Non-core space is leased for, say, five years, and if day-to-day requirements cannot be serviced from our own portfolio, we will buy from the serviced office sector."
It is a global phenomenon. Telefonica, the dominant Spanish operator, has indicated that it intends to spin-off its property portfolio to a separate company, while Bell Canada has disposed of its real estate to Trizec-Hahn, a Toronto-based group.
Technology and market liberalisation are having other, more subtle effects on operators' space requirements. National operators have in the past been state-owned and heavily overstaffed. Increasing competition means they are having to cut staff numbers drastically. At the same time, operators today need a different mix of skills. The nature of the business is changing as market liberalisation promotes competition at all levels. Operators are having to transform themselves into marketeers; the balance of the workforce is changing from engineering to marketing and sales.
These new business divisions have to be able to respond quickly to products and services introduced by competitors - a novel experience for most former monopolists. Property directors have to face the challenge of providing accommodation for project teams at short notice.
The new skills mix implies a higher proportion of staff whose jobs involve considerable travelling.
Intensive efforts are being made to make the best use of the space that is available. Flexible working space - "hot-desking" or "hotelling" - is one option. BT is working with its research arm at Martlesham Heath to develop ways of connecting computers and telephone by wireless, a technology which could markedly affect the way offices are developed, refurbished and reused.
