London’s serviced offices are in hot demand: here’s what it all means for you
Submitted by Catrin Fox on
If you’re reading this from the comfort of your serviced office, we’ve got news for you: you’re a trendsetter!
Just a few years ago, flexible serviced offices were considered a niche submarket within the commercial office space industry. They fitted in quietly amongst the towering office blocks and landmark buildings of central London, providing temporary space for SMEs and a place for start-ups to cut their teeth. Fast-forward to today and central London’s serviced office scene is thriving.
In business centres, small businesses and independent professionals are occupying the same space as larger firms and corporate project teams, whilst coworking spaces and business lounges are hotbeds of new business opportunities and shared knowledge.
But flexible space isn’t just good news for business owners. It provides a positive outcome for local economies, too.
According to the annual report from the BCA (Business Centre Association) in collaboration with CBRE, which utilised market data supplied by BCA members in 2015-2016:
“We can confidently say that our sector supports around £18bn worth of UK GDP, through the provision of flexible space for 93,000 businesses employing over 480,000 people. That is up by around 13,000 businesses and 80,000 since we published the first set of figures for 2013.”
Where did it all go right?
According to the BCA report, the flexible office space sector is continuing its upward trajectory:
“Despite the challenges of Brexit and wider economic uncertainty, the business centre sector continued to grow in 2015 and 2016, with turnover up 13% and numbers of workers up 11%.”
Even before this point, the serviced office industry has been experiencing demand and growth as more organisations recognised the advantages of a flexible business environment.
In 2015, Deloitte released a report into the Central London serviced office market (based on a 10-year period from 2004-2014), during which the industry “has seen significant growth” with a 67% increase in the share of floorspace dedicated to serviced offices in London.
Interestingly, Deloitte notes that the market is mature yet still evolving and is becoming “more acceptable for all types of businesses”, not just smaller occupiers:
“Ultimately, a sector that was once seen by some as a stop-gap solution for small businesses has demonstrated that it increasingly appeals to a wide range of firms, who are attracted by the flexibility, quality of buildings and unique working environments that serviced offices can offer.”
We know that demand for flexible workspace has been growing for some time, and is continuing to do so. The big question is ‘why’, and this is at least partly related to economic conditions.
During and immediately after the global credit crisis of 2008-09, when uncertainty loomed large in even the most established of companies, the business community began to understand the value of flexibility in one of their most expensive assets: their workspace.
This acted as a wake-up call and served to highlight the importance of flexibility as both a workplace and a business strategy. As Jeremy Bates of Savills puts it: “Such [fast-growing] companies cannot take the risk of committing to a conventional five- or 10-year lease when they don’t know whether next month they will be two people or 20.”
As noted by the Instant Group in their 2011 ‘Global Serviced Office Review’, “the 2008 financial crises and global recession had a significant impact on the serviced office sector” and yet, market conditions also “provided several unforeseen benefits” that helped to strengthen the industry. Awareness of flexible workspace was one, followed closely by broader acceptance.
Market conditions coincided with other key drivers, too.
In their whitepaper ‘The Flexible Workspace Market’, GKRE noted that the digital revolution has been steadily transforming the way people work. New business practices, mobile technology, greater connectivity and the ability to work anywhere is fuelling opportunities for business owners to cut fixed workspace costs and simultaneously boost employee productivity through flexible office space, and more flexible working practices.
Couple these trends with the huge boom in start-ups and small businesses, not to mention growth in technology and service sectors, and you’ve got a tidal wave of potential office occupiers that are perfectly suited to the modern serviced office environment.
Sound familiar? If that sounds like your business, you’re probably sitting in a flexible serviced office right now. So, here’s to you! The trendsetters, the pacesetters, the visionaries, and the future.