Nearly 100m sq ft of flexible workspace is needed across the UK if current levels of corporate demand are maintained.
Corporate occupiers such as Uber, WPP and Currys have all cited their future use of flex space with many predicting that it will make up more than 30% of future portfolios.
If just 20 per cent of corporate office portfolios moved to flexible workspace, there would be a shortfall of nearly 100m sq ft, according to research from The Instant Group and EG.
The Flex market in England and Wales would need to grow by 40% to deliver the supply required if just 10% of leased office tenants moved to flex. While the market would need to double if 20% of tenants moved to flex. Major cities would need to grow by less than 20% on average whereas secondary markets would be woefully under-supplied. Towns and cities such as Reading, Nottingham and Northampton need flexible supply to increase but a minimum of 50% to cater to any real growth in demand given present supply and occupancy levels.
The increasing amount of vacant traditional office space currently in the market could provide the solution to flex supply growth and would transform the flexible workspace landscape across the UK benefiting both landlords and occupiers.
“Expectations of the office have altered radically as a result of the pandemic, flexibility and a higher level of amenities and services have become key requirements for businesses of all sizes,” explained Craig Hughes, of The Instant Group.
“An increasing number of leased office tenants are choosing flexible workspaces not only because they offer a lower-risk commitment, but also due to the wider range of products on offer, complete with hospitality-style services and a whole host of amenities.”
Across England and Wales, around 626 million square foot of traditional office space is currently leased, and if we saw just a 10% shift of occupiers towards flex space, this would create a shortfall in flex supply of around 39.9m square feet.
With contractual occupancy rates within flexible workspaces continuing to rise, this shortfall will only grow, creating a huge growth opportunity for the workspace industry.
“Overall, the flex market in England and Wales would need to grow by 40%, and only the more mature markets of Birmingham and Manchester would need to deliver growth of under 20%, with all other UK towns and cities requiring supply growth of 35% and above. Any movement of traditional occupiers above 10% would result in a severe shortfall of flex supply, with demand outpacing available flexible space.”
Anna Reed, Data Director at EG, says: “As existing leases come to an end, we will see the need for flex space to continue to grow as some occupiers search for a new approach to office life. The pandemic placed focus on the importance of office layouts and peoples desires to work in a more flexible way which will continue in the foreseeable future so occupiers will see flex space as key to keeping staff happy and engaged. The data shows us that the market will need to move quickly to keep up with demand, especially outside of the major UK cities.”