The report also reveals that the growth is driving ever more competitive rates, lowering the cost of all kinds of office spaces within the capital. Over the last two years, office prices in Hammersmith have fallen by 29%, whilst Paddington is 32% cheaper as a direct result of greater flexible space availability. The rates in prestigious Knightsbridge are still amongst the highest in Central London, but have dropped by 38% between 2014 and 2018.
According to the new report, entitled The flexible workspace boom in London and beyond, the UK is catching up to the US with total coworking space stock, with 60m sq ft and 80m sq ft in the UK and US, respectively.
Richard Smith, CEO of Office Freedom, explains:
“The increase in availability of flexible working spaces from new operators and attractive terms have maintained pressure on workstation rates. Whilst areas such as Mayfair and Knightsbridge continue to demand the highest average workstation rates at nearly £900, rates can be as low as just £328 in East London.
“Flexible workspaces are booming and we are seeing more and more large corporates, such as Amazon, Facebook and Microsoft embracing the benefits that flexible workspaces bring. Savvy businesses, large and small, can easily look at the average workstation rates and see where they can make substantial savings.”
Broader industry estimates suggest 30% of corporate real estate will be flexible workspace by 2030.
The boom in flexible office space take-up is also linked to changes in accounting standards, according to Office Freedom. The revised standards bring future lease obligations onto the balance sheet and therefore makes short term flexible leases more attractive. Companies are considering the balance sheet and profit and loss impacts of a 10-year lease compared with those of flexible offices and this is now a key financial consideration.
Richard Smith, CEO of Office Freedom, added:
“Companies appreciate the link between modern workspaces and employee productivity and wellness, and the right environment can have a beneficial effect on staff recruitment and retention.”
In the US, coworking giants WeWork and Regus are reported to manage 23 million sq ft in the US between them. New York remains the coworking capital of the US with over 330 coworking centres. In Manhattan alone, flexible and coworking operators occupy 9.2m sq ft, with WeWork reaching a milestone last September after the behemoth became the largest office tenant in New York overtaking JP Morgan Chase and Co.