A gleaming new headquarters. But what is it going to do for the share price?

GlaxoSmithKline's new offices boast a high street complete with beauty salon and cafés

One of the most innovative and expensive new buildings in corporate Britain is fully open for business this week after the last of GlaxoSmithKline's 3,200 head office staff moved into its £300m headquarters in Middlesex.

The drug maker's new global HQ – halfway between central London and Heathrow airport – is so large it has a high street, with cafes, shops and even a beauty salon at its heart.

And it is the latest example of the trend of global companies to concentrate their operations in large centres, projecting a strong corporate identity to the outside world and wringing the greatest returns from their assets – both architectural and human.

Tom Riggs, site director at the new GSK House, said the building was designed so employees had to enter via the Street. It is even spoken with a capital S.

"The Street is seen as a way of making people interact within the building, a common place everyone can meet up in and work. It is a much more productive, fun environment."

According to a GSK brochure: "With its capacity to stage a wide range of events, displays and town hall meetings, the Street offers a new dimension to employee communications."

The building was intended as the corporate HQ for SmithKline Beecham, and preparation work was well under way before the merger with Glaxo Wellcome in 2000. Originally intended for 2,200 SKB employees, the plans were reviewed at the time of the merger to accommodate additional Glaxo staff. Mr Riggs reckons there is scope for at least a 10 per cent expansion in staff over the next few years.

The project was the brainchild of Jan Leschly, then SKB chief executive, who was impressed by what he had heard of British Airways' £200m Waterside headquarters at Harmondsworth, near Heathrow. Waterside was designed by Norwegian architects to resemble a village, with different "neighbourhoods" linked by cobbled streets with cafes and shops, including a Waitrose supermarket.

The project development team at GSK House were given help by their counterparts at BA and visited Waterside several times.

Jon Rouse, the chief executive of the Commission for Architecture and the Built Environment (CABE), says the international trend is for large global companies to want to inhabit similarly large headquarters. The focus is on the bottom line, every bit as much as on winning gasps and gongs for architectural innovation.

"The bottom line is this is about getting people to stay longer hours. It is about creating a neighbourhood feel so that work is not just a singular activity, something you can't wait to get home from, but somewhere where you do different things in different places."

The Street at GSK House is equipped with 10 computer sockets where employees can connect via laptops to the company intranet. Other connections are scattered in the building's many lounge areas and ad-hoc meeting spaces, replete with ergonomically designed chairs and views over the Street.

The building is also kitted out with about 500 pieces of art, including 11 major pieces, several specially commissioned for the GSK House.

GSK, the UK's second-largest company and the biggest pharmaceutical company in Europe, is reluctant to set out the cost of fitting out the building and moving staff over the last six months. But it insists that there are considerable medium-term savings to be made from bringing together functions previously carried out on eight separate sites around the south of England. A number of the vacated properties are owned outright by GSK and their sale will also whittle down the immediate costs of the project.

GSK says the success of the building will be measurable within months. The hope is that statistics on staff turnover should show retention rates rising and help paint a picture of improved morale.

Mr Riggs added he expected evidence that the different divisions brought under this new roof were integrating, learning more about each other, and staff were putting faces to what were previously just telephone voices, bouncing ideas off each other.

Mr Rouse said: "It does work. I spent time at the Boots building in Nottingham, which brought together departments that had been scattered across the city, and it has made a difference to the levels of interaction between them."

GSK House is unlikely to go far, however, to address the more serious concerns occupying investors with regard to GSK's future profitability. These include the threat of copycat competition to a number of its blockbuster drugs, where a series of patent disputes are being fought in courts around the globe, and the hit-rate of its research and development work to create new drugs. R&D work is scattered across research centres around the world.

As with R&D, though, GSK believes it needs to keep HQ employees from defecting to smaller, less bureaucratic and hierarchical organisations. Keeping so-called "gold collar workers" is cited as the number one reason for embarking on building a giant headquarters, according to Mr Rouse's research.

"This is a trend among big corporates because it shows the company is thinking about presenting a strong image of being a progressive company and a caring employer," he said.

"It is also important for corporate identity and brand image. And it gives them greater flexibility of space, since buildings like this are endlessly changeable as the companies grow and change."

GSK is additionally portraying its headquarters as a powerful, expensive symbol of its commitment to the UK. GSK's defection to the US has been a perennial concern since a spat between Sir Richard Sykes, its outgoing chairman, and the UK Government over the introduction of cost-benefit screening of new drugs to be made available on the National Health Service. The concerns were heightened by the merger, which led to plant closures in the UK and gave the group a new chief executive, Jean-Pierre Garnier, who lives and mainly works in Philadelphia.

A spokesman said: "Would we have spent all this money on GSK House if we were in two minds about our commitment to the UK?"

TRADING UP AND TRADING DOWN OTHER COMPANIES ON THE MOVE

BRITISH AIRWAYS

British Airways' head office, Waterside, in Harmondsworth, has been severely criticised since its completion in 1998. The building cost £200m at a time when many in the City said BA should have been cutting costs. Dubbed Ayling Island, after the former chief executive, Bob Ayling, BA claims the new headquarters are cheaper to maintain than their older buildings. Waterside will be close to the new terminal five site. A recent rethink found the building was 35 per cent underused, and the group is moving in another 1,000 people, taking the total to 4,250.

HSBC

HSBC is moving to Canary Wharf, in the Docklands, east London, from the City this summer. The investment bank found it impractical to have its staff scattered over several sites in the City, and were frustrated by regulations preventing high-rise building inside the Square Mile. It joins a number of investment banks relocating to the site, run by Canary Wharf Group, attracted by lower rents and a lighter planning regime. Sir Norman Foster designed HSBC's 40-storey glass tower, where more than 8,000 employees will work.

ORANGE

The mobile phone group, part of France Telecom, will be moving its UK operational offices in mid-2003. Currently based in London's West End, it has decided to relocate to the Paddington Basin, close to Paddington Station. It will provide staff with easier access to rail links to the North-east and Bristol where the company has other main offices. The offices are being built in an urban regeneration area, where property development is more attractive. Orange is cagey about the likely costs of the building, saying plans are yet to be finalised.

ICI

One FTSE 100 company at least is moving in the opposite direction, as ICI moved to more modest accommodation in Manchester Square in London's West End last month. Its historic headquarters at Millbank was costing too much and was inappropriately large now ICI has shed much of its old bulk chemicals business and its pharmaceuticals business. The interior of its new rented accommodation, a six-storey high building, was designed by Tilney & Shane.