It wasn’t long ago that serviced offices were more of an afterthought within the real estate market. However, the phenomenal growth in popularity over the last three years of co-working and providers such as WeWork has propelled the sector on a global scale. This is evidenced by the fact that major landlords are embracing the trend, with British Land recently announcing the launch of its own branded flexible workspace.
The interesting twist is that neither co-working or serviced offices are a new concept and have been around for many years with their flexibility being a primary catalyst for demand. The question is what is driving their popularity now?
While there is no doubt that the international rise of WeWork has brought the sector to the attention of those in the real estate industry, there are also a number of other factors that have played an important role.
The primary one is technology, an area that has evolved significantly and continues to impact the way we live and work. The growth in technology and the possibilities it provides has resulted in people demanding more from everything whether in their everyday life or their business and work environment. For an occupier, technology increasingly enables space to be used more efficiently to the benefit of a business and its staff. This is a trend that has not been ignored by providers of co-working and serviced offices, with much of the new space now available incorporating high-tech fit outs and the latest in connectivity. This in turn leads us on to the next area of talent…
A company’s staff is its biggest single asset and therefore retaining and attracting talent is crucial to success. Part of this for an occupier is demanding more of its space to ensure it is well-balanced for work and wellness, providing a lifestyle and experience for staff. The result is more and more occupiers seeking space as a service with both corporates and start-ups looking for offices that will encourage creativity and innovation, as well as the opportunity to collaborate and inspire in a shared environment. For example, Cocoon Networks in the City of London includes a spa and nutrition bar for occupiers, whilst The Office Group included an outdoor running track as part of its new building in Old Street, EC1.
Finally, since the financial crisis we have seen a large number of successful new start-ups and the growth of the contingent workforce with companies outsourcing work on a freelance and contract basis. This workforce is not tied to an office and are hired for a finite period of time, therefore allowing them to be more footloose with their base.
All of these elements have combined to drive demand for co-working and serviced office space by both start-ups and larger businesses, resulting in a plethora of new providers come to the market to meet these requirements.
The ultimate question that surrounds co-working and serviced office space is whether it is set to stay? Having turned a fundamental corner in its popularity and demand on an international scale from start-ups and corporate occupiers alike, it would appear so.