UK Flexible Office Take-Up Growing In Line With VC Investment

• Flexible office specialist Workthere has identified a link between growth in serviced office take-up and venture capital investment.
• Certain UK cities have recorded year-on-year increase in take-up from serviced office providers who recognise the potential for scaling businesses.
• These cities include London, Bristol, Cambridge, Aberdeen and Edinburgh.

According to Workthere’s latest research report*, venture capital (VC) funding in the UK reached a record high of £4.3 billion in H1 2019, which is a 45% increase on the same period in 2018.

Workthere highlights that, in line with the surge in VC investment, certain UK regions have also witnessed a year-on-year increase in take-up from serviced office providers who have recognised the potential for start-ups and scaling smaller businesses to expand.

In terms of where this money has been directed, tech has been the clear winner attracting 60% of all VC funding in H119, compared to 44% in the same period in 2018.

“In particular, the sub-sector that is really driving growth is Fintech, which has accounted for eight out of the top ten funding deals so far this year, compared to just three last year,” says Jessica Alderson, global research analyst at Workthere.

“Moving forward, this is definitely an interesting sub-sector to watch in terms of expansion outside of their primary London offices into wider UK markets.”

Central London saw flexible office providers account for 762,188 sq ft of take up in H119, compared to 729,602 sq ft in the same period in 2018.

Similarly, Aberdeen and Bristol saw take up levels from this sector increase during the first half of 2019. With no serviced office take-up recorded in Edinburgh or Cambridge during H118, both cities saw the sector increase its presence.

Freddie Ward, associate director at Workthere, comments: “Whilst overall venture capital investment in the UK has outpaced flexible office take up this year, there are some very obvious exceptions in the form of London, Aberdeen, Bristol, Edinburgh and Cambridge, where there seems to be a distinctive link between the two figures. London is an established hotbed for VC investment, but it is particularly interesting to note the growing interest in regions where there is not only a strong university presence linking to new talent, but where there has also been strong inward investment and development that has made them an increasingly popular choice for occupiers in general.”

Workthere states that the average deal size for UK VC investment doubled to £5.9 million in the first half of the year with 724 deals recorded compared to 1,147 in H118.

*Workthere has reviewed venture capital investment within 12 office markets across the UK, including the City of London and West End markets, using data from PitchBook.