Serviced office increase in London 9th November 2015

The UK’s serviced office market is booming. In London serviced office floor space has grown by a staggering 67% in the last 10 years and this momentum has spread to some of the UK’s other major cities with Bristol, Aberdeen, Glasgow and Northampton all reporting in excess of 15% growth in the number of serviced office centres between 2013 and 2014, writes Giles Fuchs.

A series of key drivers are underpinning the growth of the UK’s serviced office market and this is a paradigm shift and not simply a trend: Growth of SMEs fuelling serviced office demand Britain currently has a record 4.5m private sector businesses, with SMEs accounting for 99% of them.

Last year a record breaking 581,173 businesses registered with Companies House and with the number of start-ups expected to continue to rise over the next decade, the market opportunity for serviced offices is significant. The flexibility of the serviced office model in comparison to regular commercial leases, including the speed at which companies can adjust their requirements and the absence of lengthy contracts, enables SMEs to establish a professional office environment, often with far more advanced facilities and more centrally located than they could typically afford by leasing traditional office space.

Furthermore, the serviced office model helps SMEs to manage costs. By providing ‘packaged solutions’ costs are more predictable and with a ‘pay per desk’ pricing model companies aren’t paying for space that they don’t require.

 Finally, as a ‘plug-in and play’ solution, serviced offices negate the need for large upfront capital expenditure to fit-out, making them a particularly attractive option for SMEs. Sectors that favour serviced offices demonstrating robust growth Whilst businesses from across a broad spectrum of sectors favour serviced offices for their flexibility and ease of occupancy, the Business Services and Creative industries continue to dominate, accounting for 20% and 19% of serviced office tenants, and the growth of these sectors is fuelling demand. In regards to the Business Services sector the UK is a global leader.

The industry accounts for nearly 10% of UK economic output, and is highly fragmented, with SMEs accounting for a significant proportion of the industry. Similarly, the creative industry is expanding and is now worth £71.4bn per year to the UK economy, accounting for 6% of GDP and employing over 2m people. By 2025 the UK is predicted to become the global ‘creative services hub’.

A shift towards flexible working With mobile technologies such as smart phones, laptops and tablets now widely accepted as business essentials, it has never been easier for companies and their employees to work remotely. Access to such technologies and resources is having a significant impact on our working culture, liberating us to work where and when we want. Recent Deloitte Millennial Surveys have shown that the upcoming workforce is looking towards organisations that foster innovative thinking and encourage creativity. This is complemented by the serviced office model with many providers such as OSiT incorporating breakout spaces and onsite cafes/bars for more a relaxed and informal approach to working. The move towards remote and mobile working is supported by Government initiatives concerned with increasing flexible working practices.

 Culturally we are moving away from a fixed 9am-5pm, Monday to Friday notion of working, which makes the serviced office model of paying per workstation a more beneficial option for many businesses. The issues outlined here are not temporary trends but paradigm shifts in working culture. ‘Flexibility, not fixed’ will be the office space mantra of the future. -