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.

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.

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

The post Could the Flexible Office sector really be worth up to £126 Billion by 2025? appeared first on Loc8 Commercial Blog.

In its 20^th year the survey looks at the number of new office developments that have started in the capital.  The latest suggests that more than 51 new office buildings have begun construction in the last six months, putting building work at a 20 year record.

Chris Lewis head of occupier advisory at Deloitte said, “Availability is the lowest it’s been for 15 years. The amount of development we’ve seen feeding through over the past five years has been below average, and as a result there has been very little space completed,” he said. “It is a surprise to see this many new schemes.”

He went on to say, “the pendulum is swinging away from landlords back towards tenants, with greater choice leading to more opportunity”. These record increases suggest demand has not slowed down over Brexit fears for the UK economy.

So what is currently under construction in London?

New Buildings in London

By far the largest building to start in the last six months has got to be 70 Farringdon Street right on the fringe of the area known as Midtown. It’s a colossal 843,000 square feet and due for completion in 2017. It is one of a number of new developments in this part of town which has seen prices soar. Availability has become limited as businesses look for alternatives away from the West End.

However, topping 70 Farringdon Street is the 40 storey 100 Bishopsgate building which at 867,000 square feet is located in the heart of the City skyscraper belt close to the Gherkin on St Mary Axe.

So these along with many of the other 51 developments are already 42% let at this early stage. Proving popular with a mix of businesses across the technology, financial and media sectors.

Interestingly, the London Tall Building Survey 2016 listed 94 tall buildings submitted for planning consent in the last year. Making a total of over 200 high rises waiting to start construction. By far the tallest of these is One Undershaft at 73 storey’s it will be the City of London’s tallest building and the second tallest in London after The Shard.

We will keep you posted on developments over the summer as new buildings launch and others start construction.

Main photo by Alamy

The post London Office Space Construction At An All Time High appeared first on Loc8 Commercial Blog.

Here is the Loc8 Commercial serviced office sector round-up for 2015 and a look ahead at what we can expect in 2016 across the UK.

2015 Round-up:

With total office take up over 7 million square feet in the City in 2015, the serviced office sector has lead the way with over 10% of the total according to the latest report from Savills, published at the end of the year.

With 2015 completing a three year period of office growth across the City it was the serviced office operators that set the biggest record. They accounted for more than 1.9m sq ft of the total office space over 2014 and 2015 which compares to a total of around 1.5m sq ft between 2005 and 2013.

Office take up was dominated by four strong sectors. Professional services accounted for 19% of the total space taken followed by Insurance and Financial services at around 17% and the TMT sector at 12%. One of the surprising changes has been the 9% take up by the Banking sector after a few years of low performance.

Of the planned office space scheduled to open in 2016 more than half (54%) is within the area known as the City Core, which covers EC2, EC3 and half of all the EC4 postcodes in the City of London. With Carter Jonas predicting further growth in commercial property investments in Central London of 8.8% in 2016 this anticipated new space may not be around for very long, especially as 2015 ended with healthy occupancy levels in London of almost 96% (Savills December 2015).

With the latest plans submitted in December for what will be the City of London’s tallest tower, the Undershaft due to open in 2019, it’s important to note that a total of 5.2m sq ft of new and refurbished space will open in 2016 which is set to fall short of the expected demand.

The scramble for take-up of the expected space is set to mirror 2015 and continue the growth seen since 2013 and will see occupancy rates return to pre-recession levels. The serviced office sector in particular, will continue to experience the increases seen in 2015 helping to cement the sectors growth back to pre down-turn levels last seen prior to 2008. And this strong growth will continue to be driven by the Central London market with growth over 10% in 2015 set to continue. Southwark led the way in 2015 at 17% whilst the Greater London area saw significant growth of around 30% last year.

Outside of the strong London market, Manchester saw the serviced office market grow by 9% with workstation rates across the city rising by some 5% year on year. Interestingly Bristol and Cambridge made up the trio with Manchester to lead the growth in England with Aberdeen, Glasgow and Edinburgh in Scotland and even Belfast showing significant increases in both the number of new serviced office centres and workstation rate increases compared to previous years.

Looking ahead:

So what’s in store in 2016 in the UK commercial property market?   Well according to the latest reports from both CBRE and Savills the record growth in the market seen since 2014 is set to continue but with significant improvements coming from the recovering local regional economies, particularly the South West and North West. Which means the good news will be continuing for serviced office providers who have grown their portfolios with new business centres and refurbishments.

Picture courtesy of DBOX for Eric Parry Architects

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