Serviced Offices in 2016: An Overview
We take a look at the industry’s key successes, setbacks and emerging trends, and look ahead to what the future might hold for flexible working in the coming year.
The serviced office industry has existed for about 25 years, and during that time Search Office Space has seen its popularity gain traction as businesses adapt to become more flexible.
Despite the economic and political uncertainty caused by the EU referendum in June of this year, the UK serviced office and co-working sectors have remained resilient and continue to grow at unprecedented rates.
Interest in flexible workspace dipped in the two months following the EU Referendum but recovered again quickly. The industry looks set to capitalise on the economic uncertainty created by the result.
- The portfolios of leading workspace providers continued to expand. Regus planned to open over 300 new spaces this year, WeWork plan to add another 9 centres in London next year, whilst The Office Group posted impressive financial results for 2015.
A surge in occupier demand led to an 11% increase in flexible business centres in 2015/16, bringing the number of locations up to around 3 000. This was influenced in part by the number of corporates opting for serviced offices this year.
As part of his #LondonIsOpen initiative, London Mayor Sadiq Khan established the Workspace Providers Board to protect, promote and expand London’s open offices for fledgling startup businesses.
The growth of the knowledge economy continues to drive the need for flexible working; by 2020, the amount of people employed in the tech industry is predicted to have risen by 6%. Larger corporates like Microsoft and Amazon are also choosing co-working over traditional models.
Industry buzzwords embraced by millennials, such as ‘collaboration’, ‘coworking’ and ‘innovation’ gave the serviced office sector a strong online presence and increased its #mediaexposure.
Since the first ‘official’ co-working space opened in San Francisco in the 1980s, the number of office solutions designed for entrepreneurs to collaborate and connect in is accelerating. Over 10 000 worldwide co-working spaces were recorded in 2016, over 80% of which are planning to expand by adding more locations next year.
2016 keywords epitomise the millennial generations' attitude to working and workspace.
The Northwest, East and Southwest of England have witnessed a rise in demand this year.
In an unpredictable economy, ‘northshoring’ is an attractive option: rent for office space in large northern cities like Manchester, Birmingham and Glasgow is around half that of London.
Onwards and upwards in 2017?
The UK is currently the leading global serviced office sector and industry professionals foresee it thriving in 2017 as foreign investment continues to flood the country’s commercial real estate.
A report by Carter Jonas estimates London’s office rental costs will increase by 6% on average (10% in West London). This could drive new businesses to areas outside of London like Brighton that are cheaper yet well connected to the capital.
Serviced offices and co-working spaces will appeal to those looking for flexibility and value for money in the lead up to Brexit next year, and for this reason the serviced office industry is likely to prosper.
Short term/ flexible leases will appeal to occupiers who want to minimise risk and keep their options open in 2017.