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As UK Serviced Office Take-Up Soars, Experts Predict There’s Still More to Come

by Cecilia Amador de San José
August 28, 2017
in Business
Reading Time: 3 mins read
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Savills recently reported that the “serviced office take up across the UK has increased by 176% in H1 2017, reaching 1.07 million sq ft compared to the same period in 2016.”

Amid the UK’s current state of flux regarding Brexit, the UK flexible workspace market has, once again, proved that the workspace-as-a-service industry thrives in times of uncertainty. Last year (2016) amid the uncertainty of the Brexit vote, the serviced office industry acquired about 386,750 square feet in the first half of the year.

The continued growth of the industry in the UK comes as no big surprise to some.

Giles Fuchs, CEO of Office Space in Town, said: “The growing demand for serviced office space across the UK looks set to accelerate and will continue to drive strong take up in London and increasingly in regions outside the capital.

“Today’s businesses desire a new kind of workspace – one that allows them to follow flexible growth patterns and to adapt to changing economic fortunes and traditional long leases are simply not practical for these businesses.

“Uncertainty in the wake of the Brexit vote has also encouraged businesses to look for flexibility, and the serviced office model offers the most attractive and appropriate solution.

“We are optimistic that the confidence and success across the UK serviced office sector will continue.”

The growth of the industry hasn’t only been in increased square footage, as noted by the Savills report. The highlight of the report comes in the form of increased workspace take-up, reaching 860,368 sq ft in Central London alone. Yet the good news isn’t unique to London.

“The markets outside the capital also saw substantial growth”, the report reads. “Research shows that the M25 office market saw take-up by serviced office operators rise from 44,676 sq ft in H1 2016 to 109,886 sq ft in H1 2017, while in the regional markets, serviced offices accounted for 4% of overall office take-up in the first half of the year at 95,987 sq ft, compared to 41,568 sq ft during the same period in 2016.”

And although the uncertainty surrounding the UK has helped power part of this growth, there is more to it than just that.

Savills believes that this growth is also due to the changing nature of flexible workspaces, mentioning corporate coworking as one of the key driving factors.

“We are increasingly seeing larger firms and corporates recognising the benefits of having a presence in a serviced office environment as it provides them with an opportunity to integrate and collaborate with these new and creative companies as well as access a growing talent pool.”

There is also another trend that’s shaking up the industry, particularly in the UK: the emergence of property groups and real estate firms as active players in the flexible workspace market.

In June this year, Blackstone acquired The Office Group, one of London’s largest operators.

“Blackstone, the largest real estate private equity firm in the world managing $102 billion of assets, announced their acquisition of London’s The Office Group. With a portfolio of 36 buildings, the acquisition gives The Office Group the impulse they need to globalize their brand.”

Blackstone wasn’t the only one to realize the potential of the industry. British Land, a property group, also reacted to the increased demand of flexible workspaces by launching a new serviced workspace brand in the UK.

Property groups and real estate firms have an advantage over traditional workspace operators — they have the funds and readily available real estate necessary to set up a space and grow exponentially. British and UK-based firms weren’t the only ones to take up an active role in the market.

As Steve Eveleigh, essensys, wrote in a recent article, “the US-based private equity fund Carlyle purchased three London buildings to bring a new brand, Uncommon, to London.”

With increased market growth comes increased competition in the form of new players, acquisitions, and mergers. It’s no longer a question of whether the industry will continue to grow or not, that much has been made clear; instead it’s a question of who will be able to learn, adapt, and build towards a stronger industry.

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Cecilia Amador de San José

Cecilia Amador de San José

Cecilia Amador de San José, Senior Associate Editor of Allwork.Space, is based from wherever her laptop is. She enjoys traveling and visiting new flexible workspaces. If you'd like Ceci to check out your workspace, feel free to reach out to her at [email protected] (and send a plane ticket).

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