- Flexible workspace occupancy across the UK is hitting pre-pandemic occupancy levels according to recent research from The Instant Group.
- The report suggests that large companies intend to build flexibility into their real estate portfolios moving forward.
- The immediate problem is that less than 2% of current flexible workspace stock can accommodate large space requirements.
New research from The Instant Group reveals that flexible workspace occupancy across the UK is hitting pre-pandemic occupancy levels, with average rates reaching 80%.
The research, based on Instant’s view of 287 flexible workspaces, suggests that flexible spaces in the UK are “returning to some degree of normality” — although in some cases ‘normality’ has taken a turn for the better.
In particular, the continued utilization of flexible space by larger organizations remains high, suggesting that many companies intend to build flexibility into their portfolios going forward.
“Larger companies are increasingly driving demand for flex workspace, whether that be for head offices, satellite offices or local drop-in spaces. The ability to adapt at speed is now a key priority for larger businesses, and this extends to their real estate portfolios.”
Speaking during a recent podcast interview with Frank Cottle from Allwork.Space, John Williams, CMO at The Instant Group, noted that large corporates are not only using flex space in their portfolios, but are becoming dependent on it.
Williams noted that large organizations are in a “test and learn process” to monitor the environments their staff are using, what draws them back in, and what works for them. And while there is no telling how things may change in the future, for now at least, flexible space is a significant part of that equation.
Lack of large space
However, while this poses good news for operators of flexible space, the immediate problem is lack of availability for large space requirements.
According to Instant, there is a limited supply of offices with 25-100 workstations, while office space for 100+ workstations is even more scarce, with just 2% of current available stock accommodating this size of requirement.
Outside of London, just 15% of available offices can accommodate requirements of 25+ people.
“Operators are starting to respond to the growing demand for larger spaces and some have announced plans to expand their portfolios, however, it will take some time for these new spaces to be available in the market.”
As for central London, Instant’s research reveals that vacancy rates for flexible office space “have already dropped back to pre-pandemic levels”, perhaps a lot sooner than expected.
Rising occupancy rates is also pushing up pricing across London. Average rates have already seen a 5% incline since Q1 2021.
Instant highlights the proliferation of empty traditional office space as an “exciting opportunity” for operators looking to expand and provide larger spaces, including those looking for partnerships with landlords.
Lucinda Pullinger, Managing Director UK, The Instant Group, said:
“Existing flexible providers will need to turn their focus to investment in larger spaces, particularly outside London. It also opens an opportunity for traditional landlords who are facing continued high vacancy rates in their spaces.
“As more corporate companies put value on agility, diversification in supply will present occupiers with more choice and more solutions, enabling them to find the right solution for their business.”