Brexit triggers flux in flex office market
Flexible workspace supply and demand increased by 16% and 19% respectively in cities around the world between Q1 2018 and Q1 2019, according to the latest Global Flex Market Report from The Instant Group.
The report’s authors analysed 20 years of data from 31,000 workspaces. The combined market for ‘coworking, serviced offices and executive suites’ now accounts for 3% to 5% of the total office space in the 18 cities featured in the report. This figure is expected to rise to 10% by 2024 according to lease data Instant collected from CoStar.
According to the report, the countries that are expected to see strong growth are India, South Korea and Japan. Instant said there were various reasons for this growth, from the strength of the startup and SME markets, to the development of a more relaxed attitude towards working practices and culture.
America is currently one of the most stable markets due to the expansion of the already developing flexible workspace market. There have been high levels of growth, above 20% year-on-year, across Latin America, notably in Mexico and Colombia, as well as in US cities Phoenix, Portland and Indianapolis.
The Europe, Middle East, and African flex market has risen from 10,600 workspaces in 2017 to 14,650 in 2019. Instant predicted this will rise to 17,300 by 2022. The Asia-Pacific market has risen from 8,600 in 2017 to 11,592 in 2019 and is predicted to outstrip the EMEA market by 2022 when it reaches 18,700. The Americas previously had 6,800 in 2017, this has since risen to 8,707 in 2019, and is predicted to reach 13,500 by 2022.
John Williams, head of marketing for Instant, explained: “Since the Brexit vote, cities like Frankfurt, Dublin, Paris and Berlin have grown double the global average year on year. London has not been negatively impacted, but there has been an increase in supply which has impacted on pricing.”
This suggests companies are taking back-up flexible space as a contingency if Brexit damages their operations in the City of London.
The report also said that while flexible office space was predominantly taken up by SMEs and startups, corporations and larger businesses have started to buy into the trend. Requests to suit the needs of larger companies, of more than 10 desks, now make up 20% of the total flexible workspace market demand. According to King Wan Sing, CEO and founder of JustCo: “The coworking model appeals to many large businesses as well. These businesses get to tap into a community of talented and like-minded individuals and businesses to seek new connections, leverage a common pool of resources, attract the best talent, explore business opportunities and experience the benefits and network effects of the community, which helps expand their network and drive success to their business.”
On a more surprising note, much of the expansion of flexible workspaces has been seen outside of Central Business Districts, most notably those in London and New York.
In London, office districts have emerged away from traditional areas in the West End and City Fringe, towards Vauxhall, Hammersmith and Southwark. New York City is the most expensive market per desk in the world, despite a 4% decrease in desk rates, and a 21% increase in supply since Q1 2018. Like London, much of the growth has been seen outside the CBD in Manhattan, in favour of Queens and Brooklyn.
James Rankin, head of research and insight at Instant Group said there was “more growth to come as client awareness of non-lease options increases the search for more choice in the market.” He said that “we have only seen the tip of the iceberg for larger corporate requirements as companies look to flex 20% of their portfolios or more.”
The Instant Group finds flexible workspaces for clients and lists more than 14,000 flexible workspaces on its website www.instantoffices.com