Flexible Workspaces are Leading the Way in Commercial Real Estate in the UK

Flexible Workspaces are Leading the Way in Commercial Real Estate in the UK

updated October 3, 2019
Flexible Workspaces are Leading the Way in Commercial Real Estate in the UK

Instant Offices recently published its latest research report “UK Market Summary: Flex Is Leading the Way”. The report highlights how over the past 12 months, the UK’s regional market has been one of the fastest-growing markets in the world. 35% of new CRE stock over the past year was taken up by flexible space operators. The flexible workspace industry accounts for just above 7% of all UK office stock. This figure is expected to increase to 10% by the end of the year.

Across the UK, demand for flexible office space continues to grow at a fast pace. The Instant Group’s proprietary data projects that by the end of 2019 we will have seen an uplift of 23% in just the last 12 months, with the regions continuing to show higher than ever before activity. The highest growth in demand continues to be seen in the secondary locations and cities across the UK

The take-up data shows that flex has been a driving force behind the broader office market over the past year. If this level of take up continues on a consistent basis – and from the client demand we are seeing, this would be a reasonable assumption – then the total flex offering in the market is going to dominate the market for next five years at least. John Duckworth, MD UK & EMEA, The Instant Group

Over the last 12 months, demand for larger spaces has outperformed the industry average, as interest for flexible space grows into new areas. For any industry to see demand levels increasing by over 30% annually is astonishing, but for spaces of over 1,500 sq ft, this now has become a regular occurrence. What is particularly interesting is that the highest rates of growth in this area are being seen outside of the capital. Data indicates that while providers are expanding away from primary cities, the growth in demand in many secondary cities still outweighs new supply.

The UK flex market has gone from strength-to-strength over the last 12 months, despite economic and political volatility. Growth is expected to continue to grow in 2019 and 2020, however, the rate of growth may be slower compared to previous years. Nevertheless, while supply might slow in the short term, client demand shows no signs of slowing down. This sentiment “forms our prediction that the market will see a resurgence in new supply from 2021 onwards.” There is also an expected growth in secondary cities where supply is tight. “The high office rents (and desk rates) of London and overwhelming living costs are seeing firms of all sizes look at alternative locations across the UK, the vast majority of which are currently under-served by flex space providers.”

Overall, it is very clear that the flexible office sector still has ample room to grow.