Common Ground Workshop take cues from the urban realm at Embassy Gardens
Common Ground Workshop have completed a new speculative hospitality development including a restaurant, bar and events space at Embassy Gardens, Nine Elms.
We speak to The Instant Group’s John Williams on how they are adapting their offer, what the short- and long-term futures will hold and whether this marks the second rise of coworking.
While many workers are reluctant to head into the centre of towns and cities (and discouraged from doing so right now, of course), others are craving interaction, collaboration, those ‘workplace standard’ facilities and a buzz around them. We’re even starting to see major corporates looking to move their entire operations to WFH. So where does this leave the coworking/flexible workspace operators? Does the current climate create major new opportunities for them? Are these operators looking to expand their facilities out to the suburbs/regional areas? Are they changing the look, feel and layout of those facilities? If so, is this the long-term future of their operations – or is this more of a short-term fix?
We ask a few of the country’s leading operators how they are adapting their offer, what the short- and long-term futures will hold for them and whether this marks the second rise of coworking.
First up, John Williams, Director at The Instant Group.
Established in 1999, The Instant Group is a workspace innovation company that rethinks workspace on behalf of its clients, injecting flexibility, reducing cost and driving enterprise performance. Instant places more than 11,000 companies a year in flexible coworking, serviced or managed offices.
It is a remarkable time to be in our sector right now – demand levels have reached new highs and the enquiries keep rolling in, particularly for space in the regions and the suburbs. The effects of the pandemic are accelerating great change in the industry. This was always bubbling away under the surface but COVID-19 has really bought it to the fore. We’re seeing an increased number of businesses considering a more agile commercial real estate strategy.
What ‘agility’ means in real terms is offering employees more options – i.e. working from home, using the central main office and having a regional satellite office closer to home. For many, it’s a combination of all three. It is not as binary as the mainstream press are trying to make out in all its ‘death of the office’ articles.
Market rates for flexible workspace have actually increased in the majority of cities in the UK during lockdown, which is pretty remarkable in itself – and if demand stays at the levels we are seeing now then we will see a positive outcome for the sector in the future and flex playing a more prominent role in corporate portfolios.
Occupancy levels across the UK have stayed pretty robust but the most recent lockdown protocols that have been introduced have been a real knock to the market’s confidence, in my view. Over the summer we saw a lot of clients returning to flex space but now I suspect that we are going to experience a ‘wait and see’ perspective from clients who want to see what the Government does next.
The work-near-home model is really coming to the fore and firing up the demand for a hub and spoke model within corporate portfolios – regional hubs at the core and a central office in the city. We spent a lot of time speaking to senior commercial real estate leaders over the past six months and, of the enterprise businesses we spoke to, around 75% are starting to consider this real estate model and looking at more regional office spaces to cater for this.
So, the pandemic is certainly not the death of the office, but the introduction of a more network focused set-up whereby employees might only visit the central office for wider corporate events, networking or other specific purposes. In many other instances, flexible workspaces will fill the gaps between hub and home, and make remote working more focused and fun.
Long-term systemic change is happening. This was always on the agenda, but the pandemic has pushed CRE portfolio transformation higher up the corporate to-do list. We have delivered more than 3 million sq ft of flex space to large corporates over the past decade and that demand was picking up pace pre-lockdown, driven by the need to become more agile, improve operational resilience and free up CAPEX. All of those benefits to a flex approach have only become more pertinent and more pressing now.
It might have taken a global pandemic for companies to be able to realise the benefits of considering more flexible workspace as part of their commercial real estate strategy, but it seems inevitable now that we are going to see more and more businesses of all shapes and sizes looking for a flexible workplace approach with agility at its core. Businesses are realising that the new normal will mean not just offering more flexible working locations but also understanding their operational performance and the value they represent – something many have struggled with in the past. From a data perspective, the market in the UK has seen requirements for flex space grow in size to an average 5+ people last year (from 2+ in 2015), and this increase in size is being driven by corporate interest in flex.
It is a services business and one that is much more dependent on cash flow than that of the asset-managers/landlords, who have historically dominated the office market. The reality is that many clients are not paying their bills right now and that is eating into the cash flow of the sector. But there is the very real sense that, if the operators can get through the next six months, then there is a very healthy, profitable market there for them.
We saw after the trials of 2008 that, as the contingent workforce of entrepreneurs grew following Lehman Brothers’ collapse and then the global financial crisis, it forged the future of coworking and flex space. All those new businesses that were created at that time chose to use flex space rather than work at home as they wanted to be privy to the networking and energy that type of workspace brings – it really made the market for flexible workspace and I see no reason why we will not see that happen again in 2021, and the sector take another quantum leap.
Agility now takes on numerous meanings as a business quality: agility around workplace occupancy, design, location and tenure. For flexible workspace, this provides a significant opportunity. At the beginning of the year, we predicted that flexible workspace would make up 12.5% of total office supply in the UK by 2023 – we are now confident that we will more than exceed that.
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