Instant published a new report at the end of last month about the 2017 Flexible Workspace Industry. Based in the UK, with a global presence, Instant is a leader in finding, creating and managing workspaces in office markets. This report draws on insight from leading workspace operators and hints to existing and growing trends that are impacting the market, from the traditional office sector to Coworking. Here are the main highlights of this new 2017 Flexible Workspace report.
In this article:
The Sector Continues to Grow
Instant’s numbers continued to demonstrate sector growth. The total provision of all flex space grew globally around 18% in 2016. In this same year, Instant’s own data demonstrated an increase in workspace inquiries for over 100 desks, a factor that points to a driving factor of overall flex workspace growth: uptake by larger corporate and enterprise organizations.
Within this growth factor, Coworking and hybrid space have nearly doubled since 2013, now comprising one-third of all flexible workspace globally. The increase in hybrid uptake is indicative of the changing mindset of operators previously offering only open-space Coworking toward a hybrid approach, accommodating not only members’ needs for private office space but also operator need for a recurring revenue stream for sustained profits.
Changing Market Dynamics
Instant’s report is largely driven by insight from long-time and large-scale UK operators such as The Office Group, LEO, and Orega. The UK flexible workspace market is one of the longest standing and most concentrated markets in the world; these operators can appreciate changing trends when they see them.
As explained by Beth Hampson of LEO, global political and economic dynamics and uncertainties are altering business decisions and needs. The need for greater flexibility in real estate contracts and space requirements, which at one time were short-term, are now becoming longer-term needs – an indication that businesses aren’t just relying on flexible workspace as a temporary solution, but rather a longer-term approach and integral part of their business strategy.
Whether it’s because of global market leaders like WeWork or URWork sweeping in millions of dollars of funding or workspace franchises like Serendipity Labs and VentureX, the concept of flexible workspace and Coworking has gained global recognition as a legitimate business solution rather than a passing trend.
The owners of Orega suggest that 2016 was a significant year in which the flexible office industry got global mainstream recognition, especially among property landlords and asset owners. The services and benefits offered by Coworking and serviced offices received widespread understanding and awareness, driving greater demand among not only freelancers and entrepreneurs, but also corporates.
Where traditional Coworking – open space plan with no dedicated offices – has rarely proven itself to be a profitable business model, operators have recognized the magnitude of integrating what was once a business or executive center model into their spaces. Uptake by corporates is now validating the move to monetize and scale their workspace businesses. With that, a higher premium charged to corporates means higher margin for operators, and in turn, a Coworking business model that seems to be a win-win for all stakeholders.
Predictions for the Industry
Instant’s 2017 Flexible Workspace report suggests what trends we can expect of the industry. In London, the areas with the highest pricing increase and occupier demand were the suburbs of London. David Johnstone, previously of CBRE, suggests that growth of Coworking and serviced office sector will shift increasingly from cities to rural areas and satellite towns. Corporate and enterprise uptake of shared workspace real estate will drive demand in suburban areas and secondary cities.
Based on trends seen this year, niche market workspaces that unite the community beyond the social and based on professional goals will rise. Workspace operators must differentiate their proposition, not only from local competition but from global behemoths like WeWork, who are recently taking a very aggressive approach to gain members and increased market share. From the type of space you offer, the community you nurture and the amenities provided, operators will need to be determined and creative about attracting and retaining members.
Top Notch Services and Amenities
Operators will need to focus on delivering services, facilities, and amenities that give them a competitive edge on the competition. It’s more than great tasting coffee, flexible contracts, and decent-Wi-Fi. According to Richard Taylor at TOG, operators will utilize design and facilities to accommodate “a modern lifestyle and an increasingly mobile workforce”. No longer will an open layout and weekly community events suffice. Members will expect top of the line design, unique amenities, and mobile, easily accessible services. Taylor explains that getting the physical and digital infrastructure of a workspace right will operators stand out from the crowd.
Building Bridges over Borders
International demand will increase. The mere availability of shared workspace in today’s global society has facilitated business beyond borders and overseas. It’s predicted that the increasing awareness of the flexible products and services will continue to serve as a stepping stone for small businesses to expand their horizons and even increase demand thanks to its facilitating international business mobility.
Instant’s 2017 Flexible Workspace report highlights many of the trends that we’ve seen this year. The Coworking market continues to mature, traditional real estate players continue to swarm the market, and distinguishing services from the competition is more vital than ever. The Coworking market evolved from traditional serviced offices and business centers, has never received as much attention or investment as it has in the past few years. The test of time will be for those operators who can ride out the growth phase of this sector, attract and retain customers, and scale their brands in such a way that serves market demand without oversaturating or devaluing workspace products and services.
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