“If there are difficult times ahead, the serviced office industry, which is flexible at its heart, will prosper” – Giles and Niki Fuchs, Office Space in Town
One week ago today, the UK electorate went to the polls in what would create one of the most momentous political shake-ups of our time.
Asked to decide whether or not the UK should remain a member of the European Union, a slim majority of 51.9% to 48.1% voted to leave. In the days since, the UK has been rocked by the departure of its Prime Minister, turmoil in the opposition party, stockmarket volatility and a great deal of uncertainty. Yet, Leave campaigners remain steadfast in their argument that Britain has the strength to steer its own course and negotiate new UK-EU deals to benefit UK businesses.
What does ‘Brexit’ mean for the UK flexible workspace industry? How will the decision to leave the EU affect demand for workspace in London and other cities? And are there any opportunities on the horizon?
OT contacted a number of operators and business owners in the UK to hear their views:
Simeon Howard, Your City Office
I believe in the short term, we will see a draw back in investment due to the largely unfounded negative sentiment, which will likely result in a slowing down of demand. Everyone wants to know how things will pan out over the next few months, but I think that the fundamentals remain the same, in that London is still one of the best cities in the world, not just to live in but also to operate a business from. I strongly believe that once the hysteria calms, demand will rise again. I can already see the smart money taking advantage of the opportunities made available by this referendum result.
London has seen an enormous amount of investment stream into the flexible workspace market, and as a result, there are concerns that with an over-supply of stock, any downturn in the economy, would more than likely cause occupancy rates to fall. If this does happen, it’s a short term thing.
Could flexible space benefit as companies look to cut their lease terms?
Absolutely, and it won’t just be companies looking to cut their leases either. We have to remember that the global concept of working environments is changing, and with the assistance of technology, more and more businesses are choosing flexible and community based spaces to operate from.
Mark Furness, essensys
At this time, it is not possible to predict, let alone measure the impact of Brexit on the flexible workplace sector. So far, it’s business as usual. However, in this period of political and economic uncertainty, it is likely that operators who have a large number of clients within the financial and business services industries will be the ones most closely monitoring the aftershock of Brexit right now. Developing compelling customer-aligned initiatives and regular two-way communication channels is therefore more important than ever and could be a key element of client retention in such times.
Being an SME ourselves, like many of our customers and their clients, at essensys we have many employees who originally come from various EU countries, especially in our R&D and software teams. We have reassured them that we are absolutely committed to ensuring their job security and a bright future working at our company. Our vision, goals and exciting plans remain unchanged and the diversity of our talent is key to our success.
Giles and Niki Fuchs, Office Space in Town
In 1979 our family had an office building in Northampton town centre. It was empty and all attempts to let it had failed due to the bad market conditions. Our mother, Caryl Fuchs had been told about a new business in New York called business centres from our father, Harry. She immediately turned the building into the first serviced office in the UK and filled it in a couple of months. This was the first clear indication that the serviced office industry was counter cyclical.
If there are difficult times ahead, the serviced office industry, which is flexible at its heart, will prosper.
Are there any opportunities that could arise from this situation in the short or long term?
We buy, so with foreign money having 10% more buying power there is an opportunity for the quick foreign buyer to pick up a bargain before exchange rates bounce back.
Do you think the London serviced office market will be negatively affected?
London will be fine. London is the capital of the world, and businesses and people will always exit to be here. In a time of uncertainty money moves to secure areas.
Jonathan Price – independent business and financial consultant to the serviced office industry
Brexit would be a disaster for all sectors of the economy, and the flexible office industry cannot escape. There is no silver lining to this cloud for UK operators. The only beneficiaries would be operators in Paris or Frankfurt where the financial markets will move to in the future. UK operators should lobby their MPs to vote against the Brexit process in parliament.
Kevin Winstanley, ip-Xchange
Personally, despite the current turmoil and headless chicken mode everyone seems to be in, I believe, as I think many people did/do, that the European Union wasn’t getting the job done. Or if it was, it was doing it at an incredibly laborious pace. A lot of people had ‘lost faith’ in the idea and the ability for the E.U to govern effectively. The recession hit a lot of Europe hard, and the thought of expanding it, well, as someone once pointed out, if your sweet shop isn’t making any money, why open another one?
I ultimately do not think we will exit the EU. Yes, it needs reform, but reform wasn’t happening. Hopefully this vote and the prospect of other countries following suit will give it the impetus to make changes that are desperately required.
Just like flexible office space, the EU needs to be able to flex to accommodate the wide and diverse cultures and economies in the Union and have a framework that suits the changing needs of each of its members. I think it will reform, but you just never want to have to serve notice to the landlord to have your voice heard!
The flexible workspace industry has done well in the past to capitalise on uncertain economic times as the flexibility suits the occasion. However, one caveat to that. It often impacts and lowers workstation rates, so operators with tight landlord deals or management agreements may find it difficult to circumnavigate the unsettled waters. It’s about keeping occupancy up during the unsettled period which hopefully won’t be too long.
What are your views on ‘Brexit’ and the impact on the UK and European flexible workspace industry? Share your thoughts by contacting the editors or interact with OT and our readership on Twitter, Facebook or LinkedIn.
Further reading from the commercial property sector: