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How London Can Stay Ahead In The Serviced Office Space Race

by Guest Contributor
November 29, 2017
in Business
Reading Time: 4 mins read
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To stay ahead, London serviced office providers must “continue to innovate their offer and deliver a premium service”, says Office Space in Town’s Giles Fuchs.

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  • Giles Fuchs, CEO Office Space in Town, gives his opinion on the challenges and opportunities facing the London serviced office market.
  • With demand for flexible space still rising in many global cities, Fuchs maintains that “London is leading the pack” with more than 1,100 serviced office locations.
  • However, as uncertainty over Brexit intensifies, the UK faces growing competition from European cities including Frankfurt, Berlin, Amsterdam and Dublin.

Demand for serviced offices has accelerated rapidly across the globe. In the past decade, the global market has averaged 13 per cent growth and has tripled in size overall.

So far, London has remained the clear market leader, but recent figures show that a number of European cities are increasing the size of their serviced office sectors.

Some analysts perceive this as a threat to London’s supremacy, as workers are more footloose and companies — in particular tech and media, which are key sectors powering the growth of services offices — are increasingly mobile allowing flexibility of choice in terms of where they locate. However, as long as London continues to anticipate and respond to the changing needs of businesses, it can remain the serviced office capital of the world.

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Giles Fuchs co-founded Office Space in Town alongside his sister, Niki Fuchs.

During the first quarter of 2017, serviced office providers increased their share of total take-up on a global scale. The UK and USA remain the most established serviced office markets and London is leading the pack with more than 1,100 serviced office locations.

However, this burgeoning demand is not limited to the established London and American markets.

Other hubs both in the UK and across Europe are witnessing phenomenal growth in the sector. The most impressive changes come from cities including Birmingham, where serviced offices accounted for 25% of total take-up in Europe, and Frankfurt which has increased its share from 0.5% in 2016 to 7.5% in Q1 2017.

Other cities, including Berlin, Amsterdam and Dublin are also growing at an unprecedented rate.

The rapid expansion of the sector globally has been fuelled by industries that are inherently flexible. Sectors such as media, technology and IT have experienced exponential growth in recent years and are not contingent on their location for their success.

Technology dominates Europe’s 1,000 fastest-growing businesses with many of these companies being in the post-start-up phase. These firms often demand a level of service that conventional offices are unable to offer. Serviced offices, by comparison, provide HQ-quality facilities without the long term financial commitment attached to standard office leases.

Lisbon and Barcelona have developed a strong culture of coworking and parts of Eastern Europe are developing a thriving entrepreneurial scene. All these locations are experiencing a corresponding uptake in the demand for flexible office space.

There are sound economic and business behavioural reasons to believe the growth in demand for UK serviced offices will continue over the next decade. The UK market has grown by 31 per cent since 2008 and it is projected to increase in value significantly by 2025 to £62 billion on conservative projections and £126bn on more optimistic forecasts.

In part, this will come from the consolidation of the tech sector and expansion of small firms still in a high-growth phase, comprising a large share of current serviced office users.

Whilst London remains the strongest market for serviced offices, providers should not become complacent. Given the explosion of growth in the serviced office sector in other European cities, London must identify and respond to the trends driving its global expansion, whilst simultaneously recognising and promoting what specifically makes it an attractive destination.

Despite economic uncertainty around Brexit, London’s fundamental strengths as a centre of finance, technology and business remain. London is one of the best connected cities in the world, with easy access to global destinations, and attractive business rates.

To stay ahead, it’s vital that London serviced office providers continue to innovate their offer and deliver a premium service. Increasingly, firms are recognising that a happy workforce is imperative if they want to maintain high levels of productivity. This has fuelled demand for well-designed spaces with good connectivity to transportation hubs.

London-based serviced office providers must also play to the particular needs of the next generation of employees. Both Millennials and Gen Z are motivated less by financial rewards and more by wellness and workplace flexibility. Serviced offices are well placed to respond to meet these demands.

Whilst there is clear competition for serviced office occupiers from other innovative cities across Europe, thanks to its robust economy, strong infrastructure and dynamic cultural scene, London has everything to play for as it continues to lead the world in the serviced office market.

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