Strong half year performance and growth in UK flexible office space sector

Recent research indicates three quarters of UK businesses are actively thinking about changing their workplace.

The digital infrastructure specialist NCG recently released the findings of their independent survey of over 1,000 senior decision makers at UK businesses, and the results shine a light on the way changing work habits are impacting the workplace market:

·      76% are currently considering changing their workplace or expect to do so in the next 12 months.

·      59% believe flexible or coworking spaces are now the best fit for their business and its needs.

·      45% of businesses using flexible workspace are unlikely to ever return to renting their own private office.

The report also found that 70% of businesses are using an office or workspace on a hybrid or full-time basis, with 59% advising that they regularly review the choice of different workspaces to see which best fits their needs.

 Thomas Proctor, CEO of NCG noted:

 “times have changed. Today businesses have so much choice of where their employees work … flexible and coworking spaces are on the rise.

… This means that deliver [sic] great spaces and great experiences is imperative – otherwise, as our data proves, businesses will simply vote with their feet.

 It is critical that landlords and workspace operators remain agile if they want to successfully meet the changing demands of modern working – namely, spaces that are dynamic, attractive and tech-enabled. Doing so can simultaneously improve tenant retention and futureproof their assets.”

The results of this research are to some extent echoed in recently reported property market news and trends for the first half of 2024.

Workthere recently reported a 206% increase in UK enquiries for flexible office space (compared to pre-pandemic levels), including a 14% rise year on year for to the end of June 2024. The company believes this surge is driven by the need for larger workplaces and companies entering new markets, as enquiries for spaces with 20-plus desks have risen 24%. Swing space and project space requirements related to only 13% of enquiries (a fall from 20% in 2023) indicating the move towards the use of flexible office space is seen as a longer-term solution for occupiers. 

The recent H1 2024 results for Grosvenor Property UK also reflected this trend, with the group confirming it benefitted from “significant office leasing” driven by its new flex space offer. The firm has been expanding quickly into the flex office space and earlier this year committed to growing their portfolio to around 300,000 square feet.

A commitment by landlords to increasing the amount of square footage dedicated to flexible space has also been identified by infinitSpace following an independent survey of 250 UK office landlords. On average it found that respondents predicted 54% of their total office space would be used for flexible or coworking spaces by 2030, a significant shift up from the 36% currently reported – highlighting the property market’s commitment to this sector.

 The first half of 2024 proved positive for OSiT, mirroring the surge in flex space popularity. Simon Eastlake, Managing Director notes we experienced strong occupancy levels of c90% throughout the year. This combined with clients increasing their space and signing longer terms, plus increased meeting room income and higher desk rates has resulted in consistent strong revenues.

We have noticed a growing trend of more and more people returning to the office, at least for part of the week – with Tuesdays, Wednesdays and Thursdays being particularly full. Our New Broad Street office recently experienced 99% occupancy. For businesses looking for <5000 square feet flexible space (whether on a co-working, managed or fully serviced basis) is now their primary solution, rather than a traditional office lease. This is driving strong lead flows and we anticipate this demand to continue into Q3 and beyond.

Office Space in Town remains committed to our vision for the future of the office. With the trend for larger flex buildings, catering for 2000 – 3000 plus people, we want to build our portfolio to include service-enhanced multi-occupancy buildings (SEMOB), offering a ‘village in a building’ experience. We are actively looking to expand our London portfolio of properties by purchasing new buildings and working with new investors.

 If your traditional long-term office lease is up for renewal and you are considering moving into a serviced office space  do get in touch to discuss how OSiT can help you to meet your office needs and wants.