UK shared office space providers ramped up growth before pandemic
The UK’s largest shared office space providers grew the value of their property portfolios before the coronavirus pandemic sparked a shift to home working.
The serviced office space sector grew its overall property value to £18.9bn in the 2019/2020 financial year, up six per cent on the previous 12 months.
The figures highlight the growing demand for flexible working services in the run-up to the pandemic, with major firms such as IWG cashing in on the trend.
But the sector is now battling the impact of Covid-19, with many businesses set to shift to more remote working in the future.
“Growth in the serviced offices sector has been on an upward trend in recent years,” said David Rawlence, associate at law firm Boodle Hatfield, which compiled the data.
“However, the pandemic will be the real test to see whether this continues once lockdown restrictions ease – the hope is that the sector will be a long-term winner from the pandemic.”
Despite the positive figures for 2019, office space providers are now facing a sharp downturn in trading as a result of the pandemic.
Coworking giant Wework, which is set to go public through a blank-cheque deal, recently said its occupancy rate had fallen to 47 per cent, down from 72 per cent before Covid.
The decline has led operators to shift to new models, including moving away from fixed rent and the conventional leasing model towards revenue sharing leases and agreements.
Wework has already used this strategy in its recent acquisition of its City complex at Devonshire Square.
In a further sign of potential recovery IWG, the world’s largest share office provider, recently signed deals with firms including Cisco, Standard Chartered and Staples.
“With organisations looking to use their property portfolio more efficiently, serviced office providers are working hard to increase their appeal and improve their offerings, in the hope of attracting new tenants once workers return to the office,” Rawlence added.
“The serviced offices sector is continually innovating, particularly through movement away from the traditional leasing model, towards revenue shared agreements. There seems to be a general trend of greater collaboration between property owners and operators to establish creative models with sustainable, yet attractive offerings.”