property industry may be nearing, or even at, peak cycle, but serviced offices
will thrive in a marketplace bound to embattle other sectors.
a market characterised by scale backs, flexible space becomes a hedge, said
market experts at a Regus roundtable event covering the prospects for the
the wake of the 2008 recession the number of start-ups and freelance workers
spiked, along with the demand for pay-as-you go offices. In the next downturn,
this is likely
happen again, the gathering agreed.
the level of service offered by operators is unprecedented, the spaces vary
wildly, and traditional office landlords are both competing and collaborating
office providers to generate additional revenue. This creates a compelling
environment for occupiers even in the event of another lull.
a downturn start-ups will have to choose between paying £300 for a hotdesk in
an environment where they can trade with 3,000 other start-ups on a day-to-day
basis, or going back to their kitchen table. They will
that £300 is not going to break the budget,” said Kontor co-founder James
added: “Over the past six months operators have held back to see if they can
drive down prime rents from landlords. Even though they are desperate for space
and want to
they are saying let’s wait and see if there is a better deal to be had.”
Townsend and his fellow industry commentators were exchanging their thoughts
room at Regus’ serviced offices inside the News Building at London Bridge, SE1.
An unseasonably clear morning allowed for views across London, while the gentle
hubbub of co
enveloped the room.
predicted that as the sector evolves, it would be knowledge-rich startups
rather than capital-rich corporates with the power to make a shared office
scheme either flop or
providers and the tribes of workers they can attract to new developments were
now just as important to landlords as covenant strengths and lease lengths.
seen larger companies want to come into buildings because there is co-working.
It is the bigs wanting to be close to the smalls rather than the other way
Morgan, Cushman & Wakefield global tech group leader.
was asking myself, when does one of these providers become a brokerage house
for freelancers? We look at their valuation based on revenue, but there will be
a point at which
own a community of people who are very agile and are able to respond to the
needs of big corporates.” As they come to understand the benefits of leasing
space to serviced office providers,
will increasingly investigate how they can become operators themselves.
the roundtable heard this could be dangerous, since they lacked the expertise
of professional operators. Regus chief executive Richard Morris explained that
landlord partnerships were key
the development of the business, and the industry.
is becoming more compelling for all kinds of building owner, and that is key to
how the market will develop.”
has doubled in size globally over the past five years and continues to build a
network of on-demand workspaces throughout the UK.
North America it recently struck a deal to house the staff of broadband and
telecoms company Verizon in its network of offices across 47 cities. The deal
will halve Verizon’s
costs for the next five years.
vision is clear,” said Morris. “Companies of all shapes and sizes will adopt
the use of flexible workspace as a core element of how they fulfil their needs
across different economies. More companies are seeing the benefits
consuming workspace as a service rather than signing up to long-term property
The technology sector has been driving and defining the sector’s
growth, according to Will Kinnear, director at Green Kinnear Real Estate.
used the analogy of a car designer who “comes up with something radical, for a
team of engineers then to knock it into something that can work in the
marketplace” to describe how they were influencing product on the market.
Townsend predicted that as demand increases, and the sector sees a new breed of
entrants, the future of flexible working will move towards bespoke products and
expanded services. Crèches and even funeral services could be in the offing, he
added: “You will see fashion hubs start, art hubs start, and whatever else it
might be in areas that are affordable, but still central enough to attract
said these trends would emerge outside the primary cities, and would be driven
by lifestyle offering as well as affordability and internet connection. “We get
fixated with primary cities – San Francisco, New York, London – but actually
we’re seeing really interesting
come out of Barcelona, Medellin, Amsterdam, Stockholm and Bali.”
cities would continue to be centres of finance, so occupiers’ ability to “dock
in and dock out” between primary and secondary or tertiary cities was key, Morgan
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