The demand and popularity of London’s serviced office market is growing rapidly according to the latest Business Footprint report by Deloitte Real Estate.
The serviced office market has grown by 67% over the last 10 years. Chris Lewis, head of tenant representation at Deloitte Real Estate, says: “This significant increase in coverage highlights how important serviced offices have become, not just to occupiers but the wider office market.”
Serviced offices now comprise five million sq ft across central London. The City holds the greatest share of London serviced office provision with 34% (1.7m sq ft), a rise of 21% over the decade. The West End takes the next largest share with 1.4m sq ft (28%). Other locations such as Docklands and E1 account for less space but have nevertheless seen sharp three-fold increases of 350% and 230% respectively.
Competition has also increased as serviced office providers have risen by a quarter since 2004. However, 75% of the market share remains with the top 10 operators.
Lewis continues: “Fuelled by an increase in the number of operators and the expansion of office floorspace by existing players, the heightened level of competition will see serviced offices and locations continuing to evolve. The change in occupiers’ needs over the coming years will see serviced offices and co-working space move higher up the attraction scale. Not just occupiers, but landlords and developers are showing more willingness to incorporate such space.”
Flexibility is key to the core product offering of serviced offices, with future demand expected through rising interest from small to medium sized businesses that value the ability to easily adjust the type and amount of office space that they use. The report determines London’s SMEs will have different needs and different approaches to traditional working practices, and serviced offices will continue to evolve to meet these requirements over the coming years.
Lewis concludes: “The growth of serviced offices as a virtual asset class has been met by an evolution of the model. The co-working phenomenon has, in large part, been delivered through innovative, design-led operators who are focussed on community, collaboration and brand. We are seeing, and will continue to see, the proliferation of these spaces across London, delivering flexible solutions to businesses large and small. Increasingly, these spaces are becoming their own ecosystem with scaled and scaling businesses working side by side. It’s a profoundly exciting and a very real fixture in the London office market.”