According to a recent Deloitte Real Estate survey 5 million square foot of central London is taken up by serviced offices. This is a 67% increase on the last decade and a fascinating insight into how new coworking spaces have been opening frequently throughout the city.
The startup market is booming and with it the popularity of business lounges and coworking spaces is taking off. The demand for serviced offices, or flexible spaces for up and coming businesses, may mean the demise of the traditional office space. To what degree only time can tell - but we can make some predictions based on the trends we are seeing now.
London’s market is becoming saturated with coworking spaces
In recent years the market has witnessed a continued rise of serviced office conglomerates, like Regus, with smaller outfits such as Landmark-PLC and i2 Office also making major headway.
i2 Office alone have opened 15 London locations as of this year alongside opening 14 nationwide spaces and continuing expansion. Figures like these only go to show the severity of the demand for flexible working spaces in London generated by startups and solopreneurs.
Many companies are now opening new business lounge and coworking sites on a regular basis in order to compete for the best addresses and the most interesting or professional spaces.
The ‘death’ of the office in the digital age
A survey from PWC in 2014 discovered that only 14% of workers have any interest in working in a ’traditional' office environment. However, 20% preferred using virtual space and working from remote locations as opposed to a static office.
It’s not just the UK where these changes have been noted. The Bureau of Labor Statistics has estimated that by 2020 nearly 65 million US citizens - that’s about 40% of the workforce - will be freelancers, temps, independent contractors and solopreneurs. These kind of jobs feed the coworking space industry as they do not require permanent office space and often utilise cloud technologies and autonomous working.
Advances in technology have allowed businesses to be more accessible and flexible. With free but effective communication platforms like Skype and Google Hangouts, employees don’t always have to be physically present. This means that businesses can cut down on wasted desk space and approach the recruitment system in entirely new ways: for example, when considering a new hire, the job search radius can be extended internationally to find the perfect fit. Experimentation is more widely encouraged, but it still has to be in the best interest of how clients and customers relate and engage with business.
Arguments have been made for the increase in productivity in those who are offered more flexible working conditions. However there are points to be made on some reduction in productivity in low pressure coworking spaces. It has been frequently noted that employers that allow for flexibility in hours often have the most productive workforce, providing measures are taken to prevent flexibility being exploited - which is why it works best when it can be tailored to the individual employee.
The future of office practices
The traditional office will however never truly die. There is a prestige to owning a dedicated space that some companies will always benefit from, such as those where clients may need to see where and how your business works. But the old school office will certainly decline in popularity, as we have already seen.
Short term leases are preferable to buying for small companies or those whose employees work autonomously. In a world that is rife with startups there is always a want for interesting space in promising areas and building up a healthy competition within coworking space providers. In contrast the competition for traditional office space is in decline and thus it is becoming secondary to the fast-growing industry of business lounges, coworking spaces and serviced offices.
