Service: Agency | Sector: London Offices | Contact: Fergus Jagger
Arguably the defining shift in London offices has been the growth of flexible and co-working space. Led by the hugely acquisitive WeWork and largest-by-footprint IWG (home of the Regus brand), the volume of flexible space in the capital has exploded in the past two years.
But the co-working model is facing a key test: with so much space available is there enough demand to fill the desks? Much is made of the collaborative nature of the space – ‘community’ is a buzzword for any operator worth their salt – but do enough people and companies want to work in such an environment? It seems to be working for the creative industries, which thrive on the exchange of ideas, but it’s hard to see the discrete banking, law and management consultancy sectors moving wholesale into co-working space.
Despite some of WeWork’s recent innovative ownership deals, most space and operators are simply arbitraging the difference between long-term leases and short-term desk rates. At the end of each quarter, the rent has to be paid.
The flexible offices story is about shifting trends in occupier locations, such as the growth of creative in The City, as much as it’s about changing requirements. We’re about to find out how significant these shifts are, and as a result just how viable the new co-working locations are.