Market Trends of United Kingdom Co-Working Office Spaces Industry
This section covers the major market trends shaping the UK Co-Working Office Spaces Market according to our research experts:
Demand of Co-working Office Space in London Driving the Market
London is currently the flex capital of the world. At the beginning of 2020, there was more than 17.1m sq ft of flexible office space in the UK capital—over 7% of its total office stock (ten years before, that figure was just 1.9%). Flexible workspace has contributed to 35% of commercial property transactions over the 12-month period (2020) in London, despite only making up 6% of the total office supply.
There are 6,075 flex space centers across the UK, having grown 7% in the first six months alone (as of 2021). In total, flex space (coworking, serviced offices, and hybrid centers that offer both private offices and shared working) amounts to more than 85 million square feet of the UK office market. The increased demand has put increasing pressure on price, with the average cost per private office desk in the first half of 2021 at GBP 431, up 10.5 percent from the same period in 2020, but still lower than the level of GBP 464 in 2019. In London, the average price per private office desk is expected to rise by 9% in 2021.
In a post-pandemic war for talent, firms demand excellent offices, with Grade A space accounting for 90% of take-up in London. The volume of new development coming through will be suited to this quest for best in class, and rents on prime space will continue to rise due to competitive tensions between enterprises.
Pandemic Boosting Demand for Co-Working Space
Flexibility is essential in times of uncertainty. In fact, 47% of UK businesses stated they expected their real estate strategies to incorporate more flexible, serviced, or coworking spaces in the future. The attractiveness of being able to walk into a fully functional office, the flexibility to reduce and enlarge space based on headcount, budget properly with an all-inclusive fee, and stay flexible with a monthly rolling contract was magnified by global uncertainty.
In fact, Covid-19 amplified market tendencies that were already evident. Prior to the lockout, there was an increase in demand for flexible office space, and it wasn't just from startups and high-growth companies. Even larger, more established companies began to take a 'core and flex' strategy to real estate, with serviced and coworking providers handling the flex. Flexible office solutions will become increasingly appealing as businesses discover the perfect balance and blend of office space – which will take time – allowing firms to modify their requirements as their strategy evolves.
Since many tech enterprises require more than just office space, London and Manchester, as the UK's top innovation centers, are projected to witness a surge in flexible co-working spaces. Many people are looking for features and local amenities that will help foster innovation and creativity while also improving employees' working lives.
