London the Flexible Office Space Capital of the World
According to real estate firm Cushman & Wakefield, flexible office space in London accounted for more than 4.5m sq ft of take up over the last five years, making the British capital the largest coworking market in the world.
The data confirms the largescale shift towards flexible working practices and the very specific demand from the ‘Gig Economy’ for suitable coworking spaces where people can work in collaborative and shared environments on flexible terms.
A research study by Deskmag showed that almost 80% of coworking spaces in the UK are planning on expanding in 2017. Also, more providers from Europe are now entering the sector, a notable example being Dutch workspace firm Spaces which recently announced 10 new UK coworking sites for this year.
London Leads the Charge on Coworking Space Globally
The Gig Economy continues to drive London’s thriving flexible office sector which accounted for 8.8% of total London take-up in 2016, with large corporations increasingly taking coworking space alongside startups, SMEs and freelancers.
Central London flexible office take-up 2012-2016
|Year||Flexible office take up||Flexible offices as % of total take-up|
|10 year annual average (2007-2016)||605,490||5.5%|
|5 year annual average take-up (2012-2016)||906,914||8.4%|
(Source: Cushman & Wakefield)
Juliette Morgan, International Partner and Head of Cushman & Wakefield’s Global Tech Group, said: “The latest figures confirm London’s preeminent position as a leader in flexible or coworking space. The boom over the past five years has been fuelled by the gig economy, as well as a thriving technology sector which means traditional working patterns have changed irrevocably.
“We are also now seeing larger corporates including the likes of HSBC and Microsoft wake-up to the trend and place staff in coworking spaces as means of collaboration and access to talent. It’s also a signal to the market that as a large company you recognise and embrace innovation.
“Large corporates that traditionally offered big salaries but sterile working environments have had to up their game in response to the growth of the tech sector which has been attracting the cream of the talent pool. This has led to an increased focus on stimulating workspaces that spark creativity and improve employee satisfaction in order to secure and retain the brightest minds.”
A Positive Outlook for Coworking Investment in the UK
From an investor perspective the market for coworking space is growing rapidly, particularly in London via privately-backed providers such as WeWork, as well as listed REIT Workspace. New York-based provider WeWork has expanded rapidly since entering the UK in 2014 and secured a further eight locations over 50,000 sq ft in London during 2016. In addition, Hong Kong-based investor Kingboard purchased We Work’s European headquarters at Moor Place for £271million, with Cushman & Wakefield acting for the seller.
Elaine Rossall, Head of London Markets Research, added: “London’s coworking market – already the largest in the world – is only going to get bigger and expand more rapidly in response to workplace trends. The market will become increasingly competitive as it becomes further established and providers will need a strong brand and points of differentiation, if they are to continue to attract the necessary levels of tenants through the doors.”
Savvy investors will be looking for the best opportunities to invest in the coworking sector outside the capital, where regional growth is fast catching up both in terms of supply and demand. With London as the official capital of the coworking movement, this boom is set to continue in the UK for years to come.