If 2017 wasn’t evidence enough of the impressive strength and growth of flexible workspace in the UK, it seems 2018 is set to add yet more fuel to the fire.
Cushman & Wakefield kicked off the year with the release of a dedicated 70-page report into flexible space - Coworking 2018: A Research & Insight Publication - which cites the rise of flexible space as “one of the driving factors of recent positive office performance”.
In Central London alone, flexible workplace providers secured almost one quarter (21%) of office space in 2017. According to Cushman & Wakefield, flexible workspace operators now occupy around 10.7 million sq ft of space across Central London, or 4% of total Central London office stock.
However, whilst London’s take-up figures are impressive, it is the performance of regional workspaces that’s particularly notable.
Regional cities take centre stage
Around two thirds of flexible workspace in the UK is located outside the capital and as noted by the report, companies seeking to reduce overheads are “turning their attention towards regional cities around the UK”.
Cost-efficiency is just one reason regional towns and cities are flourishing. Another one is ease of access and transport hubs, which will improve further with the arrival of HS2.
Birmingham, for instance, benefits from a central location with established road and rail networks that places half of the UK population within a two-hour journey. These factors have not gone unnoticed by the business community, as the report found that take-up has increased in all cities over the past year with Bristol, Birmingham and Manchester in particular experiencing “strong growth”.
To put this into perspective, flexible workspace transactions in regional city centres accounted for 7% of take-up in 2017 - more than triple the 2% regional take-up rate between 2012-2016.
What’s driving UK growth?
According to the BCA’s June 2017 report - The Business Centre Market - much of this demand is coming from a “significant rise of self-employment” and part-time self-employment, alongside the continuing rise of new startups.
At the opposite end of the scale, flexible space is appealing to corporate clients in many different forms - and flexible workspace operators are responding. For instance, we have seen a number of high-profile partnerships between flexible space operators and real estate investors such as The Office Group and Blackstone, and the Carlyle Group and Uncommon.
Conventional landlords are also responding to demand for flexibility by opening their own coworking or hybrid workspace options, although many lack the service-led approach that sets our sector apart.
In a similar vein, flexible space operators are pushing further into conventional territory by offering longer term managed leases for corporate firms. The BCA’s 2017 research found that firms are staying longer in flexible space, “with a marked increase” in stays over 3 years.
Whilst this trend has been accelerating (between 2013-2016 the number of firms staying for 3+ years tripled to 39%), operators are seeing the opportunity to enhance this particular offering - particularly as the BCA’s research revealed that the most common reason for businesses to leave flexible space is that they’ve outgrown it.
One example is BCA Member BE Offices, which recently launched a new division - BESpoke. This new offering provides a complete end-to-end service for large firms seeking managed space, thereby providing corporate clients with the advantage of “speed of expansion and total flexibility”.
This trend for flexible and conventional space operators ‘meeting in the middle’ will likely continue this year. As Cushman & Wakefield puts it:
“The area of greatest concern to traditional landlords is the shift for traditional corporates to consider flexible workplaces as part of the real estate strategy. As flexible operators shift away from short-term membership to offering accommodation for 1-3 years then this is encroaching directly on traditional landlord territory.”
For clients, the benefits are clear. In addition to greater flexibility and a service-led offering, they have the opportunity to tap into the collaborative benefits of coworking to enhance workforce creativity, happiness at work, and productivity.
“Flexible workplaces are used as a strategic tool where employees come together on a short-term basis, to inspire and innovate in an environment outside the usual corporate constraints.”
Flexible workspace is often considered a direct reflection of current business and economic trends. One thing’s for sure, it’s moving fast - and it’s driven by the needs and demands of businesses of all shapes and sizes, from the part-time self-employed right up to world-leading organisations.
In much the same way as technology enables (or pressures) traditional companies to embrace agility and move with the times (a classic example is the new Open Banking regulations forcing traditional high street banks to compete with digital startups), demand for more agile, bespoke workplaces are levelling the playing field between large, traditional commercial property organisations and operators of flexible space. And, those same burgeoning tech sectors that are pushing into traditional business sectors are, according to Cushman & Wakefield, boosting demand for flexible workplaces - both now and in the future.
Want to know more? Join us at the BCA Conference on Tuesday 15th May 2018 when we’ll be challenging the status quo, assessing current trends and facing forward to understand the shape of things to come.