Co-working space in some of central London’s trophy tower buildings has swelled to almost 750,000 sq ft as the serviced-office sector booms and landlords look to diversify their tenant mix.
Companies such as US-based WeWork, Regus and the Office Group now occupy space in landmark skyscrapers - including the Gherkin, the Cheesegrater, the Shard and the Heron Tower - which were once the exclusive home of corporates.
According to serviced-office specialist agency Green Kinnear Real Estate (GKRE), a total of 744,841 sq ft in some of London’s most well-known and prominent buildings is now classified as flexible, co-working space.
Will Kinnear, director and founder of GKRE, attributes the growing serviced-office occupancy of these buildings to a shift in the way companies work and use space. This shift has caused owners to rethink their letting strategies, allocating an increasing amount of space to serviced-office providers.
Some of the biggest deals to land in the past 18 months include WeWork moving into 199 Bishopsgate and Aldgate Tower, taking 124,000 sq ft, NeueHouse taking 66,000 sq ft at Blackstone’s Adelphi building and the Office Group taking 33,600 in the Cheesegrater.
“Large propcos are finding the traditional large floorplate letting model coming under increasing pressure as the way in which companies work changes,” says Kinnear.
“Flexibility is in high demand from all sectors of the market, from small businesses to corporates; bringing in an operator that can run the space as a serviced office/flexible workplace is increasingly becoming a primary choice rather than a last resort. Building owners are seeing the flexible workplace market as an area where they can increase a building’s investment value.”
The growing amount of space taken by serviced-office operators in the capital’s towers isn’t just beneficial to landlords - having a trophy building in their portfolio also gives providers a prestigious product they can offer their clients.
“Operators want to have landmark sites within their portfolio to be able to offer such locations to their clients and their clients are looking for landmark addresses to be based in but also have the flexibility they require for their business,” explains Kinnear.
“With London continuing to be a destination for high-growth small businesses and corporates requiring swing space, this push for flexible space will only continue. Iconic and prestigious locations help operators sell their space, making landmark buildings an attractive proposition for the flexible space market.”