Recovery in the flexible office market has been “far from equal” as occupancy among high-end operators continues to top pre-pandemic levels while outperforming less amenity-driven competitors.
Premium service-led spaces hit an average occupancy rate of 82% across the UK in recent months, compared to 74% for traditional spaces and 80% for “value-driven” spaces, according to research from the Instant Group.
Average occupancy rates for flexible workspace across the country have been above pre-pandemic levels for three quarters in a row now.
However, while contractual occupancy has recovered from the pandemic, footfall is still below pre-pandemic levels.
Instant said there was further investment needed to bring flexible stock up to the expected standard, adding: “With occupancy rates on the rise and flexibility a key driver for many businesses, clients can’t afford to wait.”
Demand for high-quality space will soon lead to a shortage and push prices even higher, Instant warned. Older buildings will need to be retrofitted and services added to attract customers.
Lucinda Pullinger, UK MD at Instant, said: “The war for talent is reflected in companies of all sizes seeking premium workspace.
“Quite simply, companies who can offer employees a five-star office with on-demand services are more likely to attract and retain the best. Employees expect the same convenient spaces that they have at home, but with a sense of collaboration and community that can’t be found in the home.”
City centre recovery
City centres have been the other big winner in recent months, with 55% of centrally located offices reaching occupancy rates of 80% or more.
For the first time since the start of the pandemic, rates in Manchester and Leeds city centre have overtaken those in the outskirts. Similarly, in London, occupancy has returned to levels seen in early 2020.
Corporates moving to flexible workspace is driving up occupancy in city centres, according to Instant.
Some companies favour central locations to offer immediate access to amenities, while using smaller hub locations and flex passes for greater agility. But the workspace platform also said that these trends are not necessarily permanent.
“As supply of flexible workspace continues to evolve and spread out of city centres, as it has already done in London, we may well see the tables turn again,” it again.
Pullinger added: “Flex space operators will need to step up and join the race or risk being left at the starting line. With each new amenity driven location that opens in the market, the bar is raised even higher as operators strive to offer a better experience and service each time.”