South: Flexible workspace is growing influence in property market

Cushman's said its Co-working 2018 report reveals the extent to which the sector has evolved and matured.

The flexible workspace sector accounted for 17% of all office leasing activity in the UK’s nine largest cities in 2017. This compares with just 6% of leases in 2016.

Central London saw a record 2.5 million sq ft of lettings signed for flexible workspaces, more than 21% of all commercial office leases in the capital. The average rent paid by flexible workspace providers across the capital also rose to £65.50 per sq ft in 2017, a 10% increase on the previous year.

Cushman said some two-thirds of the UK flexible workspace market is outside London, and the UK’s largest cities saw significant growth in the take-up of space for co-working, as the trend for flexible workspaces spread well beyond the capital for the first time.

Take-up of flexible workplace in the UK’s largest regional cities, including Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Manchester, and Newcastle, increased from 2% of all city centre lettings in 2016 to 7.5% of take-up in 2017. This increase was largely driven by the rapid expansion of WeWork and IWG's Spaces, which were responsible for more than half of the year’s take-up of co-working space across the UK.

Elaine Rossall, head of UK offices research & insight at Cushman & Wakefield, said: “Flexible workspaces are now a vitally important part of the UK economy, and an increasingly familiar presence in our cities. The popularity of co-working has seen demand continue to grow exponentially across the country, both for fast growing SMEs and increasingly also for larger and more established companies.

“Co-working not only offers flexibility and room to grow, but can also improve the employee experience, revitalise corporate culture, and minimise companies’ exposure to long-term leases. One of the additional key drivers of the market will be accounting changes that make shorter-term leases of flexible space more attractive to larger businesses.”

Cushman said flexible workplace operators now occupy around 10.7m sq ft of space across Central London.

This has resulted in WeWork emerging as the largest taker of space in the capital over the past five years, with 2,578,000 sq ft of space since 2012. This places it ahead of Google (1,344,000 sq ft), Amazon (1,013,000 sq ft), Deutsche Bank (858,000 sq ft) and fellow flexible office provider The Office Group (853,000 sq ft).

Cushman said: "In fact, such is its expansion that WeWork now has the largest volume of office space commitments in London, second only to the UK government."

Source: CoStar