The number of landlords providing temporary workspace in London has boomed over the past decade, fuelled by small-to medium-sized businesses avoiding burdensome leases in favour of more flexible and creative offices.
The serviced office market has grown by 67 per cent over the last 10 years and now comprises of five million square feet across central London, according to research out today by Deloitte Real Estate.
The City has the biggest share, with 34 per cent (1.7m sq ft) of the market, up 21 per cent over the decade. Deloitte attributed this surge in demand in part to fintech firms seeking space for their sales teams close to their clients.
The West End has a 28 per cent share of the market. Meanwhile other locations such as Docklands and E1, near Shadwell and Stepney, account for less space but have seen sharp increases of 350 per cent and 230 per cent, respectively.
“The rise of this sector is partly because of the situation we have gone through with the economy, which has led to firms being reluctant to take up large spaces themselves when they are in start-up mode,” Deloitte’s head of tenant representation, Chris Lewis, said.
“But part of it has also been led by a drive for far more entrepreneurial and innovative space. New entrants like WeWork and The Office Group are responding to firms, mainly in the tech and media sector, looking for something different from their work spaces and seeking to attract talent,” Lewis said. He added that the misconception of these offices being more pricey was also fading.
The number of serviced office providers has surged by a quarter since 2004 to over 80. However, 75 per cent of the market remains with the top 10, including Regus and Workspace.
Lewis predicted that industry stalwarts such as British Land and Land Securities will soon be forced to follow suit if they are to keep up with changing work habits.