Flexible Office

Could the Flexible Office sector really be worth up to £126 Billion by 2025?

Read about the incredible rise in the flexible office market around the UK in our latest blog.

It’s estimated that the current market is worth £16 Billion, so in another 9 years, could we really be looking at a valuation of £126 Billion?  Some have even said this could be undervalued by 20%. It wouldn’t surprise us!!  It’s been regularly reported that The Flexible Office Industry is the fastest growing within Real Estate and it doesn’t look like slowing any time soon.

 Flexible Office

This success is one that the British are proud of and property professionals are pleased to read positive UK property sector news in the media. This growth is attracting investors around the world. A recent report between the Economic Research Consultancy Capital Economics and Property Academics, Professor White and Professor Dunse:-

Report highlights:

  • UK is the leading global serviced office sector, with the largest and most mature market, accounting for over a third (36%) of the worldwide serviced office footprint
  • Three key drivers are fuelling this growth: increasing numbers of growth businesses, expansion of key sectors that use serviced offices the most and the trend towards more flexible working
  • Sector’s growing appeal and strong returns have seen its increasing attraction to institutional investors and its emergence as a distinct property asset class
  • Yet the serviced office sector still lacks a dedicated market-accepted valuation methodology, which would further spur its growth
  • Using a conventional office model puts a £16bn value on the UK serviced office sector, but it is likely undervalued by close to 20% if it were appraised using a dedicated valuation approach
  • Modest projections for the key drivers and using a dedicated valuation approach values the UK serviced office market at £62bn by 2025, whilst more optimistic projections set it at £126bn
  • This report, for the first time, puts forward a specific valuation model to help the sector fulfil these projections and assist institutions in reaping the full reward of investing in serviced offices 

The service office industry is growing faster than European and American counterparts and has been quoted as being a “Recession busting solution” to the property sector. The rise of flexible or alternative workspaces for more agile businesses have helped the serviced office popularity.

One of the biggest factors of this rise is the ease and convenience for businesses of all sizes. The fact the majority of them are fully furnished and ready to go means less disruption to employees when they move in. Fast broadband, open space, clean toilets, cloud data storage allow networking and faster business growth, collaborations and developments.  Lack of time is something most businesses suffer from in the UK so the immediacy that serviced offices offer are hugely attractive. 

The financial model of cost per desk works well for both people starting up in business and huge blue-chips that offsite departments with multiple temporary workers.  Across the UK you can come across desk costs ranging from £50 per desk per month up to £1400+ per desk per month.  Location and accessibility plays a part in this with London being the most expensive place in the country to rent desks in. However, you can still find good deals and there are many places in London that are affordable and accessible.

Flexible Office

It’s reported that the number of flexible workspaces has increased 31% since 2008 with London accounting for 34% of the serviced office footprint.  Demand for area’s in Manchester, Glasgow, Birmingham, Bristol and Edinburgh are growing quickly too

Lee Grodent, MD of Loc8 Commercial says “It’s no surprise to me that the flexible office market is going from strength to strength. We have seen a huge uplift in enquiries over the last 2 years. Companies, whether they be Blue Chip, SME’s or Start-ups from all types of sectors are now looking at serviced offices as a viable alternative to longer term traditional leases. Flexible working is only going to increase in the years to come and I believe the serviced office market is well positioned for even more growth and innovation in the years to come.”

Early adopters of these spaces include companies from Media, Finance, Healthcare, Charity sectors with projected movements from Information, Data, Communications and Professional Services in the next couple of years.  With the ever increasing speed of broadband and technology in the workplace it’s no wonder this sector is going to keep growing from strength to strength.

Social Media Agency Owner Marc Shelkin, says “We have been operating for 3 years and although not a start-up anymore we are still small and nimble enough to rely on flexible office spaces.  We are based in the heart of Old Street which is prime space for Digital Marketing and Technology companies.  We are very lucky to have found a space that is not only affordable but allows us to scale up or down anytime without any hassle.”

If you would like to know more about serviced offices and if they are suitable for you and your business, please give one of our experts a call on 020 3031 8563 or search via our website www.loc8commercial.com

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