During recessions, the language used by many of us seems to borrow heavily from weight-watching classes. The need to streamline, downsize or tighten our belts is never far away from being underlined, probably with an angry red pen.
In the world of serviced offices, things are different. There’s no craving for cutbacks; instead, it’s a case of the bigger the better. A new report finds the UK serviced offices sector has grown by 19% during the recession and the London serviced offices market has now heaved its way into becoming the largest serviced offices market in the world.
The London and UK markets appear to be reflecting a global appetite for serviced offices, with turnover in the market bouncing from $3.6bn in pre-recession 2005 up to $6.2bn in 2010. London’s quantity of serviced offices is said to be equal to the quantity of those in Paris, New York, Tokyo, Hong Kong and Sydney. The figures show the UK accounts for one in three serviced offices across the world.
Flexibility, one of the key benefits of using serviced offices, is said to be the key driving factor for the jump in serviced offices take-up. Increased globalisation of staff and the desire to reduce risk around their fixed assets are other trends noted in the report.
Clients requesting high volumes of workstations are found most often in the London serviced offices market. There are instances of serviced offices occupiers using 100–300 workstations, although the average serviced offices tenant has seven. This is up on the 2009 figures and is nudging the 2008 high of 7.64.
The West End serviced offices market, particularly around Mayfair and Belgravia, is up to 25% more expensive than other Central London serviced offices markets.
The City and the West End register the highest number of serviced offices in London. High demand but low levels of serviced offices are found in the South Bank, Battersea, Clapham, Kensington and Chelsea.
Average serviced offices rental rates have floated between £235 (2009) and £283 (2006). The drop in 2009 is attributed to a rapid expansion in supply, which was left exposed when the credit crunch hit.
How is the serviced offices market expected to develop?
Factors contributing to the initial rise of London’s serviced offices market include the limited amount of commercial land coupled with the prevalence of long-term leases, reducing the potential for newer businesses to secure office space. Serviced offices have offered a solution by taking on large commercial buildings and dividing them up and leasing them as serviced offices under flexible terms and conditions.
London’s serviced offices market is now described as mature, but substantial serviced offices growth is also found in Manchester and Birmingham, the next biggest UK serviced offices markets. Other regions undergoing significant changes are Edinburgh, Sheffield and Milton Keynes.
The serviced offices sector as a whole is regarded as being “still in its infancy”. Those following the fortunes of serviced offices are advised to watch the emerging markets “particularly Asia and the most developed African countries”, where the fastest growth in serviced offices is anticipated.
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