The office market has spent the last five years changing radically. There are now other options. The choice has become less binary than a decision between lease or, perhaps, a serviced office space. There is now a plethora of options that in-house real estate teams and business decision-makers need to consider.
Flexible workspace is currently very prominent in the news – driven in part by the wealth of news coverage around coworking and WeWork. Business leaders are starting to ask new questions of in-house real estate leaders, “What about WeWork? Could we use that type of space? Do we have to sign a lease?” And it is not just the board asking questions, employees are asking managers, “Do I have to come to the office every day? Do you have any more locations? Can we take some other space?”
Agile, modern businesses are having to move fast. They need to react to their clients’ demands and competitors’ strategies. They need to move into new, global markets, put in place project teams as well manage existing office estates, with all of their expiry dates, space efficiencies, building issues, landlord demands and so on. They value pace and resilience but all at the right cost! But in a new market, with more options than ever before, surely the right choice is out there?
What choices are there?
There are now 3,094 providers of flexible space within the UK, up from the 2,800 recorded in our last 2018 report. The variety of space available is overwhelming. During 2019 we have seen the rapid expansion of multi-location providers across the UK market. This figure represents 10.5% growth, a figure slightly below the overall centre supply growth figure.
The progression can be seen in companies such as Landmark, Citibase, WeWork and Spaces, which all now hold at least 1% of the UK market for the first time. While London has remained a focus for these companies, expansion has also moved to secondary cities. Cities such as Edinburgh, Cambridge and Birmingham have all seen new increased focus as demand continues to grow. But across the UK, these lead suppliers, including IWG and WeWork, only make up 7% of supply – there are many more options out there.
The choices facing real estate decision makers
For larger companies with in-house CRE teams and established real estate procedures, procuring flex space can pose a real challenge because of the differences with leased space. The reality is that many existing procurement agreements do not work for flex space. Here is what you need to consider:
One issue that in-house teams have in common is that they are all under pressure for answers to this new market! They are therefore starting to redefine corporate policies and processes around real estate. They are having to work with supporting partner departments – IT and HR for example – and ensure additional engagement with clients to map out requirements to a rapidly evolving workforce. There is accordingly an increased appetite for data, and they are talking to third party flexible workspace advisors and operators. These are fledging relationships at this stage but they are taking root as the CRE market looks for answers.
What questions should you be asking?
CRE teams need to spend more time understanding the types of flexible workspace solutions available, whether that is coworking, serviced or managed offices. They also need to define how these spaces will fit their office requirements – project spaces, rapid office moves, portfolio consolidation gaps, entry into new markets, improving general portfolio flexibility, scalability or quality of space.
They need to take a look at the flex workspace market and the advisors who work within it, and how they can work alongside their existing CRE consultants. Then they can start to work up the business case for flex space and how flex solutions can be introduced into BAU real estate planning processes. This will then allow in-house teams to answer in a considered fashion whether flexible workspace is really a fad or a long-term solution for their business.
The in-house skill set is going to have to adapt to requests from the business to change and their language will have to become more inclusive of the holistic business rather than rooted in the property world. They are going to have to become conversant and comfortable with their HR and IT peers, and in many places lead them to the right solution – with the variety and increasing volume of choice this will be challenging yet very rewarding!
To find your ideal office, our workspace specialists will undertake extensive searches with a network of trusted office providers (inc. landlords and commercial property agents). We share your enquiry details with them in order to locate the ideal space for you. A member of the Instant team or service office provider will be in touch with you by phone or email, shortly to discuss your requirements.
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