Office space as an entity is in high demand, despite political uncertainty, office leasing and investment markets in London have remained buoyant. JLL reported that Q2 2018 delivered an impressive volume of transactions, totalling £5.3 billion, making it the most active quarter since Q4 2015.
The Q2 transactions reflect 2.7 million sq. ft of lettings, 24% of which represents flexible office space providers. A prominent lease was WeWork’s 20-year pre-let of the entirety of Aviation House, 131,520 sq ft of space. In January 2018, The Financial Times reported that WeWork became the largest corporate office occupier in central London and they have continued to acquire space throughout the year. They have grown significantly since launching in 2010, clearly demonstrating the growth of the market.
Co-working space is on the rise, last year, flexible office space accounted for a 5th of all office leases and JLL predict that by 2030, 30% of all commercial workspaces will be co-working. The flexible office arena is clearly growing – as proven from the stats above, the market plays an important role in the overall office leasing sector – and is becoming increasingly sought after by a growing pool of industries.
Co-working spaces allow tenants to share facilities such as printers as well as operational and technical support which often result in lower costs than renting a regular office.
Start-ups, fast-growing businesses and freelancers are particularly drawn to these environments, they deliver the opportunity to grow without being tied down to a long contract, relieving the pressure of hiring employees to fill the space or risk rent being wasted. They also give one-man-bands an office environment without responsibilities such as cleaning and maintenance, as this is taken care of by the building’s landlord.
Co-working offices often deliver creativity, modern interior, interaction, increased productivity and are commonly positioned in city centre locations. The mixture of tenants offer different skill sets and business concepts, providing the opportunity to support, create partnerships and build a professional network.
In addition to the benefits above, co-working spaces are becoming much more attractive to employees. A study conducted by Staples Advantage shows that 7 in 10 millennial employees say the workplace is an important factor when choosing an employer, and they’re not alone: company culture and workplace environment are top factors influencing workplace satisfaction for all generations.
The challenge of recruitment is rising, especially as we move into a candidate driven market. With motivators behind joining an organisation shifting, in order for businesses to attract candidates – especially the millennial generation – they need to adapt their working environment to engage with quality talent.
It will be interesting to see how the market develops going into 2019: will new developments be more open planned? Will the co-working trend continue? How will technology affect the design and management of new developments?