UK Flexible Workspace Review 2016

The flexible office market in the UK continues its dynamism and is growing at pace.

With media coverage of the co-working trend and collaborative workspaces capturing the imagination of business, the flexible workspace sector has enjoyed its highest profile year yet. The seemingly unstoppable rise of WeWork, strong performance of Regus and large take-up of space from brands such as The Office Group have dominated the headlines, and the data behind the news confirms that serviced offices are enjoying record demand from occupiers and a strong increase in workstation rates.

There was double digit growth in occupier enquiries for flexible workspace in 2015/16. The only area of the UK not to experience an increase in enquiries of more than 10 per cent was the capital itself, and London still enjoyed demand of nine per cent. The South East had the highest level of enquiries in the past year with the South West not far behind as the flexible workspace boom spreads from London to the markets outside the UK’s major cities.

The South East of England – excluding London – has led the way with increases in workstation rates as growth in occupier demand has seen a rapid response in pricing; one which has been exacerbated by relatively constrained growth in the supply of space, compared to the rest of the UK. Workstation rates across the country are increasing above the rate of inflation as demand outpaces supply, with the South East showing the largest increases of 10 per cent.

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A key trend in the capital has been the growth in enquiries and workstation rates in the outer fringe of London, namely the “Donut” that includes locations such as Kingston, Croydon and Ealing. These suburban locations have seen some of the UK’s most aggressive growth in terms of rates and enquiries despite a 12.5 per cent increase in supply as occupiers have chosen cheaper locations with good transport links over the highly competitive market in central London.

The total number of centres offering flexible workspace grew by 11 per cent across the UK in 2015/6. This represents solid growth in supply especially from the larger operators such as i2, BE Offices, Regus, The Office Group and London Executive Offices (Leo). But with occupier demand remaining robust, the market seems set for further expansion.

The UK serviced office market has grown to include 2,939 centres, a year-on-year increase of 11 per cent. This compares to 3,168 centres (excluding co-working specific sites) in the whole of the US, and a more inhibited growth rate of 4.3 per cent across the Atlantic.

The record growth in workstation rates in the UK’s cities has been driven, in part, by increased take up of flexible space by corporate occupiers. Agile office solutions are now an established element of the corporate property mix for large occupiers with double digit growth for larger workspace requirements of 40 desks or more highlighting the increased take up of flexible space by corporates.

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