The march of the flexible workspace is evolving and is set to further penetrate the office market says real estate advisor Cushman & Wakefield, in a new report, Coworking 2019: The UK Flexible Evolution Continues.
Despite political headwinds, flexible workspace operators let more than 1.2 million sq ft of space across 40 transactions in Central London during H1. If letting activity progresses at the same rate for the remainder of 2019, Cushman & Wakefield predicts flexible workspace take-up to exceed two million sq ft for a third successive year.
In the major regional markets, take-up of traditional office space by flexible workspace providers has grown significantly in the last few years. Almost 800,000 sq ft of new space across the major regional markets was acquired by flexible operators in 2017 and 2018, compared to just 100,000 sq ft in 2016. This trend is set to continue, driven by an evolution in both working practices and growth sectors across the UK.
Birmingham
In Birmingham, the first six months of the year saw 229,042 sq ft of space transacted across three deals. All three of these deals were to WeWork which has taken, 97,000 sq ft at Six Brindleyplace, 81,280 sq ft at Louisa Ryland House and 55,000 sq ft at 55 Colmore Row.
Andrew Berry, Partner in Cushman & Wakefield’s National Office agency team in Birmingham, said: “There are some 4.4 million solo self-employed workers in the UK – 14% of the workforce – a number that has increased by 35% in the decade from 2008. While self-employment increases during a recession, often through necessity, the growth has continued since the end of the global financial crisis as improving technology and changing attitudes have made it an increasingly valid and popular choice.
“At the same time, the accommodation available to the office-based self-employed has increased considerably in quantity and variety, from the individual serviced office to the more collegiate co-working space, with a corresponding range of additional services.
“In 2018, take-up by flexible workspace operators in Birmingham reached 101,000 sq ft, bringing the five-year total to nearly 316,000 sq ft.
“Looking ahead, Birmingham, along with Manchester, are likely to continue to cement themselves as the regional flexible workspace hotspots, whilst flexible providers continue to seek new opportunities in potential growth cities across the UK.”
The Supply Challenge
The development pipeline of speculative office space in Central London and the majority of the UK’s cities remains particularly thin and could prove to be a barrier to growth at the rate we’ve seen in recent years.
Christopher Dunn, from Cushman & Wakefield’s UK Research & Insight team, said: “Acquiring suitable stock will be a challenge for flexible workspace operators, particularly at a time when off-plan pre-lets are removing space from future supply at a growing pace. However, in those markets where large, quality buildings can be brought to market, the flexible offering is likely to flourish. In markets with very limited space in the pipeline, there are opportunities for commercial developers to lead the market.”