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How is flexible space shaping up in UK cities?

As the modern working environment evolves, companies in the UK’s large cities are increasingly seeking flexible office solutions.

June 21, 2019

A new generation of flexible office space is spreading into cities across the UK as a growing number of businesses review how their workspaces can better meet the needs of modern working life.

Both traditional office landlords and coworking and serviced office operators are creating spaces that offer the type of community-driven environments with the mix of amenities, hot desks, private office space and meeting rooms today’s workers want.

London dominates the UK’s growing flex market with centres such as WeWork’s Aldgate Tower offering meet-up areas and events space, and Third Door offering family friendly coworking, complete with a nursery. However, in 2018, Birmingham and Manchester both added over 100,000 square feet to their flex stock, highlighting how operators are now looking to the regions.

“We will see further growth in larger UK cities because all the main London operators are looking at these markets and that’s creating more competition,” says Elaine Rossall, JLL UK’s Head of UK Offices Research.

“The regional take-up pattern is following a similar trajectory to Central London, but lags by around three years. This suggests activity could take-off in the next few years, particularly with WeWork, who were instrumental in driving the expansion of Central London, now arriving in the regional markets.”

Flex takes hold

Regional UK markets are at different stages of growth. The Manchester market is arguably the most mature - and it was the first city outside London to host WeWork. In addition, Bruntwood’s Neo brings a mix of coworking and private offices to the city.

The 2026 planned arrival of high-speed rail link HS2 into Birmingham is already increasing interest in flex provision in the city’s relatively mature market. The standout deal of 2018 was Birmingham City University taking 118,240 square feet of space at Belmont Works for a centre targeted at STEM companies.

Across the UK, the tech and creative industries are key drivers of demand for flexible space, but corporates are increasingly joining start-ups in a growing variety of set-ups from both traditional office landlords and coworking operators.

Bristol, for example, is set to see demand increase on the back of its growing tech sector, while WeWork has just announced it will open a new centre in Edinburgh, where Codebase already acts as an incubator for start-ups and scaling tech firms. Leeds, meanwhile, is not as advanced as Manchester but Channel 4’s decision to move to the city is predicted to bring further demand from the creative sector.

However, Rossall warns not all urban office markets will offer flexible space on the same scale.

“There’s still demand for traditional office leases,” she says. “But now corporates often also want to incorporate an element of flex into their portfolio, which allows them to take space on a short-term lease if they extend or restructure.”

Operators, meanwhile, want to be in large city centres, home to young professionals and leading universities producing the next generation of talent.

Hotel-style services

The shift to flex means investors and landlords are being forced to consider what it means for their space and how they ensure it remains relevant to deliver the best returns. It’s about creating an experience that matches the needs of clients and workers.

“The driving force is to offer spaces that support agile and collaborative working which also give people access to high-quality services,” says Rossall.

“In an increasingly competitive market, operators can differentiate themselves through the services they offer, whether it’s reception services, amenities or coffee shops. Indeed, in many cases, the communal services on offer are more like those found in the hotel and hospitality industry.”

Despite these its rapid growth, flexible space still accounts for around only 5 percent of all stock in the UK. “The UK market is in a period of evolution,” says Rossall.

“London has grown so rapidly over the last five years, and I think we will still see growth, but the pace of growth in the capital will slow down.

“Instead regional centres, like Manchester, are the places where flex is going to grow quickly in the next few years because the demand and customer base is there.”

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