28/09/2022
By Jack Williamson, Head of Workthere UK

When we asked flexible office providers last year what they thought would be the biggest changes to the sector over the next five years, growth in suburban hubs came out on top. However, fast forward 12 months and our latest Flexmark survey reveals that the acceleration in the importance of sustainability has resulted in UK operators now ranking zero carbon space as the biggest trend they expect to see over the next five years. This is predominantly being driven by commitments by cities across the UK, as well as landlords, providers and occupiers, to reduce energy emissions. The demand for more eco-friendly flex space has also increased with the rise in corporates taking this type of space and wanting it to comply with ESG targets.

 

In this year’s Flexmark, the repurposing of retail assets to flexible offices was seen as the next biggest trend expected in the UK over the next five years. We have already begun to see this trend emerge with a number of examples in cities across the UK, most notably Ministry of Sound taking the former of House of Fraser at Westfield London in Shepherd’s Bush. As high streets and shopping centres look to continue to diversify their offer in order to future proof and present a greater variety for visitors, there is no doubt that the flexible office sector can add real value in this process.

Direct landlord products ranked in third place, and this actually coincides with Workthere’s own prediction for 2022, that we would see an increase in landlords entering the sector. We have seen landlords creating their own products both on the flex and traditional side of the market and even more are willing to either speculatively fit out floor plates up to 10,000 sq ft or undertake a Cat B fit out on behalf of a tenant. As the need for flexibility continues, this is a trend that is certain to increase.

Management agreements were seen by operators as the fourth biggest trend over the next five years, alongside growth in regional hubs. As the mutual benefits of management agreements for both landlords and operators become more established, combined with an increasing demand for flexible office space, we expect management agreements to become more commonplace within the sector. In terms of growth in regional hubs, this once again supports the rise in hybrid working, particularly with corporates looking to take more flex space in order to provide another option for staff.

At the other end of the scale, white label landlord products, timeshare office models and live space availability from operator to broker were considered less prominent trends by operators. We believe that although white label landlord products are down the scale, out of the three at this lower end, they are certainly a trend to watch as landlords make the decision whether or not to go into flex themselves. If it is the latter, they may well begin partnering with operators on a white-label offering.

With regards to timeshare office models, the practicalities around these do not always match a business’s ambitions or working practices and can be almost impossible to get completely right.

Live space availability from operators to brokers will continue to improve in line with technology, but it is the operators that hold the cards in terms of how this will work. It will only truly be a success if operators are on board to provide availability on a live basis, which can be challenging with the speed of flex transactions.

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