The flexible office space market continues to grow, as seen by the recent rise in average desk rates in the capital. The average desk rate in London has risen to £690 per calendar month, the highest it has ever been. This is an increase of 14% compared to the year before.
Part of the reason for this spike in desk rates is the ongoing demand for flexible workspaces and this demand shows no signs of slowing down. Despite having the most expensive desk rates in the country, Westminster and the City of London generated the highest demand for flexible workspace in the UK in the past year. The average desk rates in Westminster are £753 per calendar month and £747 per calendar month in the City of London.
Another reason for flexible office rents hitting a record high is interest in East London. Demand for space has doubled in areas like London Docklands. The reason for such demand is down to the cheaper rates in such areas, but also the proximity to the City and Canary Wharf. The average rent in areas like this is around £486 per calendar month, over £250 cheaper a month than the nearby City of London.
One of the reasons for the extremely high demand for flexible office space could be down to uncertainty about Brexit and technology. Simon Rusk, finance director of London office space provider BE Offices, told City A.M that, “with factors like Brexit and the ever-changing nature of technology and artificial intelligence, people are driving towards property as an on-demand basis. Property is becoming an on-demand service – you want to use it when you need it, like music on Spotify”.
Fears around whether the UK will be able to reach a deal with the EU before next year’s deadline are clearly causing anxiety for businesses in the UK (HSBC just announced that it will move seven offices from London to Paris early next year). On top of this, more and more companies are introducing automation and artificial intelligence which will most definitely have a big impact on jobs.
The reason these factors are playing a role in the increasing demand and therefore prices of flexible office space are because such offices provide companies with much shorter term contracts, as opposed to long-term leases. Paying monthly contracts for desks instead of long-term leases gives companies a safety net against things like a possible Brexit fallout as well as changing staff needs as automation improves.
It’s not all gloom and doom, though. Many companies choose flexible office space as it is simply the best option for their business. It can be both cost-effective and improve productivity. Also, as more people become self-employed or work remotely, flexible workspaces like coworking spaces will inevitably be in much higher demand.