According to recent research by
Cushman & Wakefield, flexible
offices now account for 8% of all newly occupied global office space
- a figure that is set to rise. Meanwhile, commercial property website
Commercial People reported that enquiries for flexible office space rose by
almost 40% in the UK’s regions in 2015, compared with an increase of only 15%
for enquiries about non-flexible space.
Despite this, too many landlords
are yet to embrace the flexible working trend and are reluctant to adjust. A
misplaced perception remains that the growth of flexible working was spurred by
the recession alone - skilled workers lost their jobs and became freelancers or
entrepreneurs requiring this kind of workspace. When the market comes back, so
will major occupiers.
The UK economy has returned to
growth, but the world of work has changed forever. Large occupiers remain
elusive, particularly in regional cities where the public sector occupies far
less space than it used to due to cutbacks in government spending.
Research published by Northumbria
University at the end of 2015 shows there is an abundance of secondary office
space supply. It surveyed 27 key office locations outside central London, and
based on this sample found that 20% of total office stock is vacant, and of
this figure a staggering 90% is secondary space.
True, the recession did encourage
the growth of flexible working because businesses were forced to take a
critical look at their fixed cost base, including long-term leases. But other
factors also came into play. Technology has made it easier for small firms
(which naturally require flexible space) to operate and compete with larger
rivals, and therefore become a more significant part of the economy.
According to the Federation for
Small Businesses, there were a record 5.4 million private sector businesses in
2015 - 146,000 more than in 2014 - and more than 99% of these were SMEs. In
addition, companies of all sizes are realising that flexible working is often
more financially efficient than being tied into a traditional, long-term lease.
But building owners should
not fear this trend. Those who embrace it and adapt their thinking and space
accordingly will reap the rewards
For example, earlier this year Citibase
was commissioned to open a new business centre in Newcastle-under-Lyme. The
under-used property had been sitting near empty for almost two years, with
conventional marketing of the building having resulted in just two small
The building owner saw the need
for a shift in strategy and assigned us to reconfigure the space, market it and
operate it as a business centre. Within two months, the space was almost full
with SME occupiers and delivering an income for the owner. This shows the level
of demand from small businesses in a regional location.
Another common misconception is
that SMEs seeking flexible office space are less secure, short-term occupiers.
In reality, they actually tend to take space for the long term. More than 80%
of the customers in our centres are what we call ‘sticky’ - they extend their
initial terms, and often remain in the centre for many years.
Risk is also significantly
reduced because the chance of 50 SME occupiers facing financial difficulty at
once is highly remote. Relying on one large occupier will often be more risky.
Flexible working is clearly here
to stay and will continue to grow rapidly for a wide variety of reasons. Across
industries, all successful businesses adjust their strategies to meet the
demands of the markets they serve - building owners must do the same.
Steve Jude is chief
executive of Citibase
If you are interested in flexible office space please call Gryphon Property Partners on 0203 440 9800 or click on the following link - Office