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From Tertiary Markets To Attracting Talent: The Instant Group Talks Industry Trends

by Kate Tattersfield
May 16, 2019
in Business
Reading Time: 4 mins read
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According to Instant Group’s John Williams and James Rankin, there is growing demand for flexible space from Fortune 500 and FTSE 100 companies.

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  • At this year’s BCA Conference & Exhibition, Instant Group’s John Williams and James Rankin discussed industry trends.
  • Research shows that 40% of demand for flexible workspace in 2019 is set to come from Fortune 500 / FTSE 100 companies.
  • Demand is also growing for secondary markets as clients seek out locations that are cheaper, less congested, closer to home and in many cases, greener.

John Williams (MD for UK and EMEA) and James Rankin (Head of Research & Insight) from Instant Group took to the stage at this year’s tech and innovation-themed BCA Conference & Exhibition to talk about how customer demand is evolving, and how operators can leverage data and research to identify customer trends and pain points.

Larger requirements

We’ve known that flexible space has been on the radar of larger businesses for some years now, and Instant’s research confirms that 40% of the demand for flexible workspace in 2019 is set to come from Fortune 500 / FTSE 100 companies. All industries are facing disruption and uncertainty, and many businesses, not least the larger ones, are changing the way they operate to minimise risk.

Instant’s research shows that demand for 1-2 desks is continuing to drop, while 3-9 and 25+ requirements are growing. Requirements that are upwards of 50-80,000 sq ft are quite normal in the UK now, which again can be attributed to growing demand for larger space.

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Instant’s survey also revealed that 64% of operators expect to see 50+ requirements growing, but just 9% say they can cater to this requirement. Operators who want to capitalise on the need for larger requirements should think about how they are going to do this, whether it’s a case of reconfiguring current space or acquiring new buildings.

Changing terminology

It seems like the terminology around the flexible workspace industry is in a constant state of flux; terms like “serviced offices” are becoming archaic and new ones are taking their place. “Coworking” has become the catch all term — a trend that is reflected in Google’s search term data.

Since 2015 the number of times people in Spain, Portugal, France, Germany and the UK have searched “coworking” has increased by 282%, while “office space” has decreased by 35%.




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Emerging markets

Although the UK remains the epicentre of the European flexible workspace industry, the market is becoming more fragmented location-wise, with more and more businesses (and coworking spaces) setting up in smaller cities and tertiary towns.

Instant is seeing desk rate growth in cities like Manchester and Bristol, whereas rates are shrinking slightly in the capital.

Needless to say the market needs to adjust depending on differing needs in each region. For example, in Asia, clients want a quiet room to relax in because they tend to work longer hours.

Hot markets

According to Instant, the key indicators for a ‘hot’ flexible workspace market include:

  • High cost of living: Comparatively high property rates alongside a work hard / play hard lifestyle.
  • High levels of education: Higher than average education levels among the location’s population.
  • Well-connected: Strong connections with both external markets alongside an established urban transport network.
  • Strong business environment: Strong levels of local and external investment, driving R&D and innovation alongside large finance and business service sectors.

Hybrid and mixed-use space

There’s a big focus on hybrid space at the moment, particularly buildings containing a blend of coworking, private and retail space. To fulfil people’s need for choice and convenience, operators should cater to different working styles and where possible provide amenities on site, particularly in tertiary locations with limited access to the city.

Democratisation

The majority of office searches are still conducted by those at Director level, but increasingly managers and assistants are searching for space — a new trend that reflects the democratisation of real estate.

Customers’ needs

The top priority for businesses using flex space is “the ability to attract and retain talent”, and of the occupiers surveyed, the majority listed HR as the topic they would want their workspace to be able to provide advice on, followed by accounting advice. Operators might want to consider offering “incubator-style” workshops and training programmes in light of this demand.

“Cost” was actually very low down the occupiers’ priority list. On the whole, occupiers want a space that offers a good return on investment; a HQ that enables them to get talent through the door (and keep it).

Consolidation

According to Instant and other industry thought-leaders, the future of flexible workspace lies in consolidation and growing brands. We, Breather, The Crown Estate and Hana (a flexible arm of the CBRE Group) are all examples of this.

Instant’s survey shows that 72% of operators expect to see further consolidation, but only 58% agree that it’s a great opportunity for the industry.

Final thoughts

As we move towards Q3 2019, Instant expects to see the demand for flexible space in secondary (tertiary) markets continue to rise, both in the UK and abroad. It’s easy to see why; secondary markets are cheaper, closer to home and in many cases, greener.

One thing’s for sure: the industry itself is set to grow, and according to the Regus Economic Report 2018, it could be worth $10 trillion by 2030.

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Kate Tattersfield

Kate Tattersfield

London-based lit zine enthusiast, music lover and freelance writer specializing in the flexible workspace industry.

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