Flexible Workspace is Becoming its Own "ecosystem"
The UK's serviced office sector has been more than 3 decades in the making, from its days as an alternative workplace for small businesses in the 1980s right up to the booming multi-billion pound industry it is today.
Not so long ago, serviced offices were considered a fringe element of the commercial property industry, suitable as a stepping-stone for startups and small businesses. But as the sector has grown, spurred on by intense focus on investment for SMEs and startups, so too has its reputation as a sustainable workplace model for all sizes of business - including large corporations.
Over the past few years, many research studies have been published, indicating that the flexible office space model is positively flourishing. Amongst them, Instant Offices revealed that 2017 was ‘the year of flexible space’. The report found:
“Coworking and hybrid space has doubled globally since 2013 and now accounts for a third of all flexible space across the world. In the UK alone, the market is estimated to include about 52m sq. ft. of space with London accounting for 19m sq. ft. of that. Just last year, coworking space grew by double figures in the capital. With such rapid growth – occupier demand surpassed the growth of market supply last year – it’s no wonder coworking and flexible space has been one of the biggest stories in property over the last few years.” - Instant Offices, 2017: The Year of Flexible Workspace
Deloitte: "these spaces are becoming their own ecosystem"
In its 'Business Footprint' report released in 2015, Deloitte Real Estate studied the flexible space market over a decade from 2004-2014. Focusing mainly on the London serviced office market, Deloitte states that it is "growing rapidly" in terms of demand and popularity, and had expanded by 67% over the 10-year period.
Chris Lewis, head of tenant representation at Deloitte Real Estate, said: "This significant increase in coverage highlights how important serviced offices have become, not just to occupiers but the wider office market."
At the time of publication, the report revealed that serviced offices comprised five million sq ft across Central London, with the greatest share based in the City of London (1.7m sq ft) and the West End (1.4m sq ft). The Docklands and E1 had seen "sharp three-fold increases" of 350% and 230% respectively over the 10-year period.
The report found that the number of serviced office providers had also risen by a quarter, and according to Lewis, this surge in both operators and square footage will continue to evolve.
As UBCUK can attest, demand for serviced offices is present not just in London, but in many other parts of the UK too.
What has led to this dramatic surge in demand for serviced offices and flexible workspace?
The recession certainly played a part in this developing industry. Smaller businesses opted for serviced offices as a flexible way to obtain a fully functional and outwardly professional office, which also supported their cause through the provision of receptionist services. The flexibility meant that businesses could upscale or downscale easily, which allowed more control over budgeting during a difficult economy.
Yet this trend wasn't just restricted to smaller businesses. Large corporate firms also turned to serviced offices in the post-recession years, and soon saw the potential in maintaining a flexible workspace solution for their future needs.
As such, awareness grew and serviced office providers - flexible to the core - were able to adjust their offering to suit businesses of all shapes and sizes. UBCUK itself developed its own Corporate Solutions package, specifically geared for medium and large firms looking for flexible mid-term contracts.
And for smaller firms, many operators - UBCUK included - have introduced greater variety in their products. For instance UBCUK's diverse portfolio now includes shared offices, similar to coworking, which provides a more collaborative take on serviced offices for independent professionals and mobile workers.
Lewis foresees more of the same, commenting that serviced offices and coworking spaces will continue to "move higher up the attraction scale" based on firms that "value the ability to easily adjust the type and amount of office space that they use".
Lewis concluded: "Increasingly, these spaces are becoming their own ecosystem with scaled and scaling businesses working side by side. It's a profoundly exciting and a very real fixture in the London office market."