Seven years after starting his first business from his bedroom, Darren Fell is moving back into the Streatham bachelor pad where it all began.

He is not down on his luck, though. In April, Fell sold Pure, an e-mail marketing business, for $7.8m (£4m) to MobiVentures, the US-based mobile phone services company, making a considerable sum for himself.

He now needs premises for his second venture, an online accountancy service for freelancers called Crunch, and felt that returning to his entrepreneurial roots was the cheapest way to create an instant London office.

For those who had not already noticed, the property market is on the slide.

Demand for commercial space in London has fallen to its lowest level in more than a decade, the Royal Institute of Chartered Surveyors said this week. Many entrepreneurs are reluctant to commit to buying or even signing new leases for premises.

Fell, who has financed both his businesses through his own funds, moved to Brighton six years ago, pushed out at the time by the cost of London commercial rents.

"I did look around, but for a business without investment it was totally prohibitive pricing to be able to afford an office," he says.

Fell would have preferred to sell his London flat in 2002 but was unable to find a buyer at the time. Crunch's headquarters are in Brighton. But by turning his London des res into a home office, Fell gets an address in the capital without the outlay of new premises.

Back on the south coast, Fell has capitalised on his bargaining strength as a commercial tenant. He initially negotiated a five-month rent-free period on Crunch's head office, which had been empty for two years. "Our deal has helped the landlord considerably in his quest to rent out other floors," he says.

Crunch now has a month-by-month licence fee giving Fell freedom to move as the company expands its 19-person operation.

Providers of serviced office space are benefiting from the current uncertainty about property prices.

Instant Offices, which has more than 1m square feet of space available in central London, is seeing record demand for its premises among companies of between 250 and 500 employees.

Rob Hamilton, Instant Offices' managing director, says: "A lot of those organisations are keen not to commit to capital expenditure now."

At the same time, Instant Offices has more space than ever to sell, mostly because it is getting space from corporate occupiers that no longer need so much room.

Pilon, which refurbishes social housing in London and the south east, went down the serviced offices route and moved into fancier and bigger premises costing half the price of its previous floorspace in Bracknell, Berkshire.

The business, which last year doubled turnover to £15m, is in one of the few areas of the housing market yet to be hit by the downturn because its work is funded by public money that has already been assigned.

Florian Moldoveanu, a Romanian national who founded the company four years ago, spent most of the last year negotiating property contracts, first to buy new premises then to lease a site, before realising the error of his ways.

"Serviced offices are the best route now," he says, adding that he has saved on the fixed cost of buying furniture and fittings as well as monthly rent outgoings. "That's money in the bank," he says.

Andrew Jardine, who owns Atlantic Trampolines in Pembrokeshire, knows better than most that what goes up must come down.

Last year, he had his offer on a former double-glazing factory across the road from his existing warehouse site rebuffed because the agent was in discussions with a blue-chip tenant. The purchaser pulled out and he is now preparing to move into the site, which will provide him with a large display area and space for his call centre.

Jardine was fortunate enough to get a mortgage offer from his bankers, Barclays, which not every business has been able to do. Atlantic Trampolines also has the advantage of being asset-rich and backed by investors with deep pockets, Jardine notes.

He haggled down the price of his new premises by about 8 per cent to £515,000, but has struck an agreement to rent the site for up to 15 months before purchasing it.

"It is cheaper for use than borrowing the money," Jardine says, adding that he and his directors did not want to overstretch themselves in the currentuncertain market.

Silver Editions, a third- generation family business selling online and mail order sterling silver gifts, pulled out of negotiations to buy new premises after the agent dropped the price by a third.

It has instead made better use of the space it currently rents, declining to renew the lease on an upstairs room it no longer needed after consolidating its dispatch department and outsourcing its call centre function, saving about £20,000 a year.

This is valuable for the business, which saw turn-over increase 15 per cent to £2m last year, but it is also dealing with a rising wage bill as it takes on more staff.

This is not the best time to move because the company is gearing up for its busy Christmas period, Kim Roberts, the company's owner, notes. However, it is a lot easier to move people one floor than to a completely separate site.

Tips when moving premises

Put your best foot forward and consult staff before moving, according to our experts.

Richard Norton

Head of tenant representation at Jones Lang LaSalle

"Although we are reading headlines that there is a shortage of space, that is not happening at the small end of the market. It is still tight and it is still very active.

"You can do several things to improve your chances. First, understand the position of your landlord. Is he stressed or not?

"Also, make sure you present your covenant strength. This means presenting the financial information about your company in the best possible light to make the landlord think you are worth catching.

"Have clarity of thought about your timescale. What is really lacking at the moment is what we call velocity, or new requests coming into the market. There is no particular push for things to happen. If you are a company that is ready to trade up you have quite an attractive calling card.

"Serviced space is good as it gives you flexibility and if you haven't got functions such as IT in-house, but you pay a premium for it.

"Rent freezes are also back in. If you are looking for 1,000 square feet in London it should offer at least six months free on a five-year lease. In the City you might get more than that. Smaller spaces are a little bit more quirky because the liability is less to the landlord."

Richard Kauntze

Chief executive of the British Council for Offices

"You should think, very, very hard about how much space you really need and where it should be. Many small businesses rush this sort of decision and regret it at leisure.

"It is also important to take professional advice, both property and legal. Savings on expert professional help are a false economy.

"Remember to talk to all the workforce. For most businesses, staff represent about 85 per cent of the cost of running the business and property about 15 per cent. You should make sure the property works for the business.

"Finally, remember that temperature and light matter most for most people. Pick an office that delivers both. If you don't, the business is likely to suffer."