Flexible workspaces in London on the rise
An office move is a huge undertaking for any business, especially when you consider current UK economic uncertainty. Office Freedom have researched the state of the flexible workspace market in 2018 and reported on key findings which will aid busy decision makers in making an educated decision in relation to their office move.
The number of services offices are rising with London continuing to be one of the highest growth markets for flexible office space. In 2018, new flexible workspaces in Central London grew by 42% with Shoreditch/Old Street and the City recording the greatest number of business centre openings. In 2018, it was reported that more than 1,300 flexible office locations were available across the capital reflecting a 9% year on year growth in stock. Hybrid work centres, that combine coworking and serviced office space, also showed a growing trend in London as existing operators changed their offering to satisfy the growing demand for multi-use space and greater flexibility.
Workstation rates fall:
Office Freedom tracked a decline in workstation rates across many key London locations reflecting the marked increase in available stock and attractive terms offered by new operators. Hammersmith has seen office prices fall by 29% over the last two years and Paddington is 32% cheaper as a direct result of greater availability of flexible office space. However, workstation rates in several other London locations, such as East London and Camden, have shown year on year increases with demand exceeding supply.
Sales continue to grow:
Office Freedom have reported significant sales growth over the five-year period and average workstation sales per transaction have increased by 66%. Transactions with the large group operators continue to outweigh those with independents by four to one. Flexible workspaces are also growing on the global stage, the number of global business centres added to the Office Freedom portfolio more than doubled between 2014 and 2018.
Central London / Average work station rates by area:
In 2018 average workstation rates in London ranged from £328 in East London to £871 in Mayfair. Most London locations witnessed a fall in average workspace rates over the past five years but some areas such as East London and Camden recorded sharp increases, with demand exceeding supply. The increase in availability of flexible space offered by new operators and attractive terms have maintained pressure on work station rates. Office space provider WeWork have been hugely influential in terms of driving and shaping this market.
- Mayfair & St James’s (£896) and Knightsbridge (£895) have the highest average workstation rates over the last five years. These locations continue to be prestigious and highly desirable, with appeal for asset management, financial services and private banking.
- The rates in Knightsbridge have dropped by 38% between 2014 and 2018. There has been a marked increase in availability in the Knightsbridge area and neighbouring locations attract many businesses away to cheaper business centres.
- Mayfair rates have remained flat across the period.
- Paddington has seen a large fall in workstation rate, down 32%. This is likely to be due to new operators opening there, such as WeWork and The Office Group. The Paddington area is also undergoing regeneration work which may also be a factor.
- Islington/Angel has seen a recent increase in workstation rate (up 17% between 2017 and 2018). This is likely to be due to increased demand for the area, as there have been no major operators opening centres there in 2018. Kings Cross has limited availability and is expensive.
- Aldgate and Whitechapel have seen a 16% increase in rates. 2018 however saw a drop in the rate, the most likely cause being competition between Mindspace, WeWork, Regus and other suppliers.
- Camden rates increased by 25%, most likely due to the strength and quality of the LABS flexible workspaces.
- EC3 has had one of the biggest declines in rates, down 29% from 2014 to 2018. This is likely due to oversupply and increased competition in the area.
- Workstation rates in Hammersmith dropped by 29% over the last three years the result of two large WeWork centres opening and offering very competitive rates.
Although there is still much uncertainty with Brexit just around the corner, it’s fair to conclude the flexible workspace industry is very much booming. With more operators opening office space at the fastest rate to date, finding the perfect space for your business is now easier than ever before.
If you would like to know more about the rise of flexible office space in London and beyond, download the full report here.
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