The City of London, the capital’s chief financial district, has long enjoyed intense demand for flexible workspace. Detailed new research by Instant Offices sheds a fascinating light on London’s Square Mile, and reveals just how much businesses are prepared to pay to secure high-profile offices in The City.
Instant’s research, which spans the last three years, shows a dramatic surge in workstation rates – particularly for small requirements of 1-5 workstations. This size group, which in previous years has hovered around £500-£600 per workstation, has soared in 2014 to figures close to £800. Indeed, this size demographic falls into the highest pricing category.
The research shows that size requirements of 6-10 has remained fairly static, yet in the 11+ size category, 2014 has once again experienced a surge – jumping from an average of £600 in 2012-2013 up to approximately £700 per workstation this year.
Drilling down further into the data, Instant’s research shows that The City’s EC1 and EC2 areas have enjoyed the most significant rises in workstation rate this year compared to the last three years, while EC3 and EC4 have seen a more modest uplift.
Interestingly, EC3 and EC4 experienced the highest rates two years ago, but have since been overshadowed by strong pricing in EC1 and EC2 in 2014.
What’s behind the solid growth of these areas?
Global interest and investment in Tech City could be a major factor. Government reports claim that between 2009 and 2012, the number of tech/digital companies in London increased 76%, growing from 49,969 to 88,215 – and it’s showing no signs of slowing down. The bulk of Tech City lies in EC1, and intense focus and investment in the area could be attributed to high demand for workspace there – and indeed higher prices.
But EC is not the full story.
Instant has seen a steady rise in enquiries for serviced offices in EC1-EC4, and while companies are paying higher rates to secure their desired space, it is also leading to increased interest in alternative locations.
“Areas like Mayfair and core EC1 are still popular choices for businesses, but the high rates that are on offer in these areas means that companies are looking at alternatives locations nearby for more cost effective options,” says Instant’s Sophie Turnbull, Senior Relationship Manager.
“There has been an increase in demand for areas with good transport links,” she added. “Areas like Kings Cross, Hammersmith, Victoria and London Bridge have seen large corporates and smaller SMES relocating due to the local amenities. This in turn has seen prices rise in these areas as companies are willing to pay more for quality offices in the more desirable locations.”
Compared to the rest of the UK, Central London is often seen as a world apart. While enquiries, deals and workstation rates remain buoyant in key areas such as The City and West End, the main problem often lies in availability, with competition fraught between businesses keen to snap up limited space in The City.
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Instant’s research shows that business centre operators are reacting to the demand, as their figures chart a steady and consistent rise in new business centres in The City over the past three years. With intensive and ongoing demand from businesses for optimum space in London’s Square Mile, which is spilling over into peripheral areas and boosting demand in transport-rich locations, London remains ‘the place to be’ for many businesses, and indeed for operators of flexible workspace.
What will be interesting to track, and which could be at the forefront of business centre operators’ minds, is: will the EC bubble burst? Is it a question of if, or when? And ‘if’ it does – which part of London will next fall under the investment microscope?
Graphics courtesy of www.instantoffices.com