What percentage of office space in London can co-working achieve? Will all businesses eventually move to into co-working spaces?
Our latest figures show that we’re currently at 4.8% flexible workspace in London, and we’re due to get to 5.5% by the end of the year. This figure is further ahead than where we said we would be 18 months ago. In terms of where it’s going to get to… well, who has a crystal ball! There’s a lot of statistics, and one that is widely quoted is that flexible workspace will reach 30% of the market. I don’t think it will ever be 100% – I don’t think everyone will end up working in a flexible workspace, however from our perspective 10-15% is quite easy to see. If you look at certain submarkets within London, they’re already over 10% of total stock, but to get to 10-15% across the board is a doubling or tripling of where we are today. If we want to get further than that it depends on how you define flexible workspace – so if we define flexible workspace as just co-working/serviced office/hybrid spaces there will be a ceiling. We’re seeing a lot of growth in managed space from landlords, and if you then start to add that in then something like 30% becomes a lot more achievable.
If you had to choose, what is one current major theme in the workplace?
Because there are so many operators now, what we’re seeing is a real diversification of the offer. Lots of operators are being quite creative to see how they can make their product stand out from the rest. We’re seeing spaces that target specific demographics – for example The Wing coming to London that is female only. There are also spaces that are targeting industry-specific sectors, such as co-working spaces for lawyers only. People are getting more and more creative as to how they can adapt their offer to appeal to different segments of the marketplace.
What are you most excited about from a property development perspective that was perhaps not considered 10-15 years ago?
10-15 years ago, flexible workspaces were almost something that were seen as a last resort for landlords, it was something they would put in to their buildings if they couldn’t lease the space conventionally. Today, in new developments, landlords are building in amenity spaces from the outset – 22 Bishopsgate is a great example, with 10% of the overall building being assigned to amenity and flexible workspace being a key part of that. Operators are potentially involved in taking on the running and the management of that amenity space, and it just means it’s improving the offer more generally for the occupiers of that building. It’s not just about their office, it’s about all the other things they can get from within that building.
Are clients becoming more knowledgeable?
We are starting to see areas in which clients are demanding access to flexible workspace even when they’re taking a fixed office. From a landlord or developer perspective it will get harder to lease space conventionally when there isn’t a flexible offer in the building.
What is the one thing you could change when working with architects and designers?
I really enjoy it! I come from more of a commercial part of the business, so actually working with architects and designers challenges our thinking in a different way and enables us to get more creative and have more input into that side of things – it’s a completely different skill set. I see it as a real positive; the challenge from my perspective is that flexible workspace is very commercial, so every part of the space has a value associated with it and it needs to be utilised. I would like architects and designers to sometimes think in a more commercial way rather than just a creative way – how can you make maximum use out of the space? I’d like them to think about what the cost implications are of delivering that, rather than just the fact that it looks good – how is it going to be used and how is it going to contribute to the returns of the space?
As a disruptor we can assume co-working will look differently in 10-20 years – what differences will we see?
I need my crystal ball for this one! I think it will become more mainstream and a larger part of the market – we’re seeing the early signs of that already. It was a part of the market that started out with customers coming from freelancers, start-ups and small businesses, and now we’re seeing large enterprise clients using the space. The best example of that being HSBC taking 1000 desks in a WeWork centre. It’s obvious that it will become much more ‘the norm’. There’s going to be at least one more cycle of activity in the next ten years. Another thing that’s interesting is that the things clients are asking for when taking traditional leases are very similar to the things they are looking for in a flexible workspace. Over time will we therefore still differentiate between these different products or will the offer across the building be more similar.?
What factors have influenced the market to look beyond traditional serviced office space?
There’s a bit of a push and pull thing going on. On one side you have the Operators taking larger amounts of space – WeWork being the obvious example of that. If you’ve got a bigger space it would take you a very long time to fill it with lots of small companies, so they’ve deliberately gone out and marketed the space to bigger businesses and sold them the benefits of that.
Separately you’ve got businesses who, in an unstable economic environment, find it difficult to predict their headcount needs ten years ahead – so they need more flexibility to be able to react to the changing needs in their business. What’s also key is competition for talent: every business is now a tech business and if you’re competing with the likes of Google and Facebook for the same talent, and we’ve seen how they invest in their real estate and the services they offer their clients, it will be very difficult if you’re stuck in a stuffy 80s head office! Businesses are leveraging flexible workspace to enable them to open up talent pools in different locations outside of their traditional head office.
What are you working on right now?
We do a lot of consultancy work; we’re working with several clients who are considering flexible workspace projects within their buildings. It’s less about what we’re doing and more about how we’re helping our clients. What’s so exciting is that everyone is thinking about this subject currently , so we’re really busy and the breadth of projects we get involved in is really exciting – not just London focused but UK wide, and also expanding into Europe. It makes you challenge yourself to think about things in a different way to help those clients adapt – bringing a concept that works in one place into a different building or city in order to meet different needs.