Strong Future For UK Flex Office Sector, Despite New Lockdown Measures

Published on November 9, 2020 - By Jo Meunier (née Disney)

• The UK flexible space sector experienced a noticeable comeback after lockdown restrictions were lifted a few months ago. 
• The UK recently announced new lockdown measures. 
• Despite the new measures, flexible workspace providers in the UK remain optimistic and believe demand for flex space will remain. 

Until recently, the UK’s flexible space sector has seen a noticeable comeback as people began returning to work and taking new space.

Research from Workthere, conducted from 5th to 9th October 2020, found:

• An increase in building occupancy levels, which saw “a substantial boost” from 23% in July to 35% in October.
• A rebound in enquiry levels for flexible office space in the UK, rising from 45% of normal levels in July to 56% in October.
• 32% of demand coming from businesses looking to downsize from a conventional lease and move to flexible space.

On a global scale, enquiry levels for flexible workspace were at 54% of normal levels in October against 44% in July and 20% in April.

However, since this research was released, the UK and a number of other European nations have entered stricter lockdown measures, with office workers told once again to work from home in an effort to control sharply rising infection rates.

What does this mean for the flexible space sector?

Emma Long, MD of BizSpace (North), said that a second lockdown brings an “undeniably” challenging time for the commercial real estate sector. The current restrictions are set to end in early December, which is also traditionally the time when enquiry activity drops in the run-up to the festive season and the New Year.

That said, Long remains optimistic: “We expect flexible workspace in satellite locations and, more specifically, centres outside the urban core to prove some of the most resilient assets through the coming months.”

This regional trend enables workers to avoid congested areas and work closer to home, rather than relying 100% on working from their home office. Working from home brings its own problems, most notably a clash between work and home life, which manifests itself in family distractions or, for those who live alone, isolation and loneliness.

On that note, Giles Fuchs, CEO of Office Space in Town, said: “In the first wave of the pandemic, lockdown remote working had a critical impact on people’s wellbeing and health.”

Citing research from Office Space in Town’s own survey, Fuchs noted that 29% of people experienced an increase in loneliness during the UK’s Spring lockdown, while 37% struggled to unplug from work while working at home.

“These trends are only likely to accelerate in a second lockdown over the winter months, as people sorely miss the community, collaboration and development opportunities of the office.”

This need for in-person collaboration has, outside of lockdown, been encouraging people and companies to return to their offices.

But many have remained wary of congested city centres and public transport systems. This is why the trend for regional and suburban offices is growing — and flexible space operators like Bizspace, which operates a network of offices predominantly in regional locations, are seeing a sharp rise in demand.

This, according to Long, is only set to continue, as traditional city centre HQs are “woefully unsuited” to physical distancing:

“There will undoubtedly be a place for the city centre office in the future but, in recent months, we have seen a growing appetite amongst businesses for flexible workspace in regional locations as leaders rethink the city centre HQ model in favour of greater flexibility and workspaces closer to home.

“The impacts of this next month will prompt businesses to think seriously about a ‘hub and spoke model’. It’s a model that we only expect to grow in popularity as businesses exit their traditional commercial office leases in the weeks, months and years following this lockdown.”

So, what becomes of city centre offices?

Fuchs, who operates a number of flexible office spaces in Central London, believes there will always be a need for city HQs.

“Far from a death knell for the office, as some have claimed the pandemic to be, we expect the next month [in lockdown] will continue to fuel a desire for the greater agility, productivity and wellbeing benefits that flexible offices are perfectly equipped to provide.”

While the rest of the year will be challenging for UK and European operators, longer term, the situation still plays into the hands of the flexible workspace sector.

“Whilst the current market is challenging,” noted Jessica Alderson, global research analyst at Workthere, “the very nature of the flexible office sector places it in a strong position moving forward to adapt, evolve and support new and existing real estate strategies.”