- According to Savills and Workthere, UK serviced office take-up outside of London is set to reach 500,000 sq ft in 2018.
- This represents a 14% increase on 2017, as a result of unprecedented requirement levels.
- Manchester and Birmingham have so far seen the greatest levels of serviced office take-up outside of London.
According to international real estate advisor Savills, UK serviced office take-up outside of London is set to reach 500,000 sq ft (46,450 sq m) in 2018, a 14% increase on 2017, as a result of unprecedented requirement levels.
The firm notes in its latest research that Manchester and Birmingham have so far seen the greatest levels of serviced office take-up outside of London, accounting for 26% and 47% of the overall take-up figures last year.
Given the strong levels of demand, Savills expects serviced office providers to increase their regional footprint by building a stronger presence in other cities across the UK this year.
Savills research also confirms that serviced office providers have shown a clear appetite for a higher quality of space as they seek to attract and retain occupiers from a range of business sectors. In 2017, 75% of take-up acquired by this group of occupiers was of Grade A standard, which is 20% higher than the all sector average.
In addition, Savills highlights a trend for serviced office providers targeting freehold properties most notably in London, however, with capital values in the regional office markets remaining attractive when compared to the capital, the firm expects more of these operators to look to acquire freehold offices across the UK.
Jon Gardiner, head of UK office agency at Savills, comments: “Whilst serviced offices are definitely not a new concept, they have really established themselves across the UK regions as a viable and appealing solution for a range of businesses. We are therefore seeing the dynamics shift in the overall office market and traditional landlords must continue to reinvent themselves in order to compete both in terms of price and lease flexibility.”
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One area that serviced offices have noted a particular trend is in the demographics that they attract. Savills research indicates that younger talent pools are particularly attracted to serviced offices, with 40% of workers in this space aged between 18 and 34, against 29% of workers in traditional offices.
Mike Barnes, research analyst at Savills, says: “The creative fit outs and higher provision of open, collaborative spaces generally found in serviced offices provide a strong appeal to a younger workforce. With the war for talent in the workplace heating up, office accommodation is playing a key part in securing the best staff and therefore needs to be competitive.”
Cal Lee, head of Savills’ flexible workspace brand Workthere, comments: “In the past 12 months we have seen enquiries for serviced office space continue to rise in the large commercial centres outside of London, helped mainly by the growing number of better quality serviced office stock in cities such as Manchester, Bristol, Leeds and Birmingham.
“Businesses are quickly realising the benefits of serviced accommodation, not just the flexibility, but also the amenity these new spaces offer. We expect demand to continue growing over the course of the next year, and as a result, continued acquisition by serviced office providers. We also anticipate that the trend will go beyond the larger commercial cities to smaller cities and towns where there is such a shortage of good quality office stock.”