The return to the office has resulted in an unprecedented demand for flexible office space. In London, serviced office space demand is now back to pre-pandemic levels, and the need for co-working co-working spaces continues to grow. In addition, many businesses are dropping conventional offices for more flexible solutions to provide hybrid working models for their staff.
The rise of the serviced office sector is a result of what many businesses experienced during the pandemic. For example, CBI reports that the number of start-ups during the pandemic grew by 22 per cent – more than the US or Germany. Additionally, serviced offices are seen as a more cost-effective way to run a traditional business, even for some of the largest companies.
The work-from-home phenomenon during the pandemic also boosted demand in the serviced office sector. Office workers benefit from not commuting to work every day and enjoy a better work-life balance. However, they still seed the need to spend some time in the office.
According to the Office for National Statistics, 38 per cent of employees continued to work at least one day from home after all restrictions were removed.
What do current trends for demand in serviced office space show? What are the main market drivers in the serviced office space market? Please read on to find out.
What Is Serviced Office Space?
A serviced office is a fully furnished workspace with all the utilities a business needs to operate. Typically, a company, small business or individual pays a monthly cost for the space. This includes desk space, telephone lines, internet access, meeting rooms, business address and tea and coffee-making facilities.
Other facilities serviced offices offer can include the following:
- Games rooms
- On-site gyms
- Shared equipment like printers
- Break-out rooms
- Parking and bicycle storage
- Reception management
- Flexible lease terms and pay-as-you-go hot desks
2022 Q3 Flexible Office Market Report London
Data on the current health of the serviced office sector in London show that demand has surged after the pandemic.
For example, during the third quarter of 2022, vacant flexible office space in London decreased by 2.4 per cent. This was even though many new flexible workspaces opened up after the pandemic. The high demand for flex spaces resulted in a jump in the median office rate, up by 3.4 per cent.
Key Market Trend of Co-working Office Space in London
The impact of the pandemic forced businesses to rethink the traditional office model. Apart from offering employees flexible office solutions, there are financial benefits from utilizing shared office space. Because of this, the flexible workspace sector is expected to grow by 8 per cent by 2027.
Here are some more key market trends Mordor Intelligence reported:
- Thirty-five per cent of commercial property transactions in 2020 were for flexible workplaces.
- London leads the world in the flexible workspace market, with over 17.1 million sq ft of flexible office spaces.
- Forty-seven per cent of UK businesses expect to use serviced, co-working or flexible spaces in the future.
- Twenty-nine per cent of workers say that flexible workspaces are important.
According to various sources, interest in co-working spaces has surged since the end of the pandemic. For example, enquiries for flex office spaces are at 143 per cent up on pre-pandemic levels. In addition, desk prices have also increased by 11 per cent, up by six per cent on pre-pandemic levels.
What Are the Main Serviced Office Space Market Drivers
The huge demand in the serviced office space market is driven by one factor – flexibility. Employees demand greater flexibility regarding the amount of time spent in the office. In addition, businesses must cut costs without impacting productivity and innovation. Therefore, serviced offices that encourage a collaborative environment are seen as the way forward.
Why So Many Businesses Rent Flexible Serviced Offices?
The flexible serviced office offers businesses greater agility to grow, expand, and adapt to market conditions. Serviced offices have flexible terms and provide all necessary amenities, including bespoke solutions and collaborative spaces. Therefore, businesses have opportunities to grow without incurring massive overheads. And if there is a downturn, it is easy to adapt to smaller spaces.
For example, for a monthly service fee, a business has access to everything required to run operations. However, they don't have to worry about business rates, utility bills, cleaning or other hidden costs. Many office providers also provide extras in the monthly rent, like refreshments, on-site gyms and access to conference rooms.
These extra facilities would typically be impossible to arrange when renting traditional office space. Therefore, serviced offices allow business owners to provide a better experience to employees.
Renting a Serviced Office in London
Are you interested in shared offices for rent in London? If so, Prime Office Search can help you find flexible serviced office space in the capital, meeting your unique requirements. Our flexible and serviced offices offer a wide range of fully furnished private office suites across the city, providing you with the flexibility you require.
Please get in touch with Prime Office Search today to learn more about our serviced offices in London and how we can assist you.