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Small Coworking Operators Are Dominating The UK Market

by Cecilia Amador de San José
June 28, 2018
in Business
Reading Time: 4 mins read
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The Instant Group’s latest UK Market Summary report found that UK operators are looking to increase the scale of their locations rather than the number of centres in their portfolio.

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  • The Instant Group recently published its UK Market Summary report, “The Evolution of Flexible Workspace”
  • The research shows that the number of centres in the market run by smaller independent operators has grown to 83% of the London market
  • It also found that operators in the UK have been looking to increase the scale of their locations rather than the number of centres they operate

The Instant Group’s latest UK market research found that there is continued growth across the UK, the London space profile is changing, larger operators are taking more space for corporates, there is an evolution of space as a service with management contracts, and that flexible workspace is growing in the regions.

According to the research, “the number of flexible office centres tracked by Instant rose to 5,320 over the past 12 months.” This accounts to growth just under the 10% mark and amounts to approximately 824,000 desks across the UK.

The UK, and London specifically, has been for a long time a global leader in the industry. Currently, “the UK represents over 25% of global supply”, though the research also expects this number to decrease as other global markets like APAC and EMEA continue to grow at a much higher rate.

Though in the past the UK market offered mostly serviced offices, “the market for flexible workspace now represents a number of different products and options for customers.” And although coworking still gets most of the attention, “the UK market supply is dominated by what is best described as serviced offices” and hybrid spaces. In fact, “the supply of hybrid offices exploded in 2017 with the tracked market more than doubling in the past 12 months alone.”

The product offering isn’t the only aspect that has evolved. John Duckworth, Managing Director UK & EMEA at The Instant Group, noted that “operators have been looking to increase the scale of their location rather than the number of centres as customer demand profiles change and we see more large-scale businesses looking to use this type of space.”

Corporate adoption of flexible space is one of the main reasons why landlords are increasingly “launching their own products, offering clients flexible solutions and the Managed Office concept,” especially when we take into consideration that this has driven average desk rates by more than 20% since 2014.”  Many landlords see the introduction of flexible space as a key component of “place-making and creating a viable, engaging scheme.”

For their part, companies are increasingly taking up flexible workspace in the UK “to help their businesses grow quickly without the encumbrance of additional CAPEX or having to manage the process internally.” Instant data points to “year on year growth of 19% for 50+ desks from corporate clients for flex space.”

Anthony Slumbers, a real estate industry commentator, noted that “just as it is now easy to buy almost any Software as a Service, so it will become with real estate. Space as a Service is the future of real estate. On demand and where you buy exactly the features, and services, you need, whenever and wherever you are.”

Small Coworking Operators are the Biggest Winners

In the US, the flexible workspace market is dominated by independent operators. The same can be said for the UK.

“Operators such as Regus, Bizspace, WeWork and Servcorp are still dominant, but strong demand for flexible options and a competitive market for conventional space have meant the long-tail of small scale and localised providers has mushroomed.”

Even though WeWork is now London’s largest office occupier, “the three largest providers of serviced office space in London in 2017 only made up 17% of the total market.” Furthermore, the market share of the top 10 operators by size is decreasing as a multitude of smaller players continue to enter the industry.

Growth in the Regions

“In London, the flexible market has grown by 25% in the last two years and now totals 20 million sq ft of flexible workspace.” However, the industry is moving away from London’s centre.  

“We are seeing new centres opening in boroughs outside of the city centre such as Barnet and Hounslow. The increase in supply has also now reached commuter towns including Cobham, Luton and Chelmsford.”

One future growth spot within the London area is Lambeth, where the Instant Group has observed enquiries for larger teams grow in the past 6 months.

Additionally, smaller regional hubs such as Cardiff, Liverpool and Newcastle are seeing growth levels above 10%, and “2017 saw increases in supply above 10% in the North West and Midlands, as the UK’s 2nd tier of cities continue to see new investment and a more agile working climate.”

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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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