The serviced office market has grown by 67% over the past 10 years, according to the latest Business Footprint report by Deloitte Real Estate.
Serviced offices now comprise 5m sq ft across central London. The City holds the greatest share of London serviced office provision with 34% (1.7m sq ft), a rise of 21% over the decade.
The West End takes the next largest share with 1.4m sq ft (28%). Docklands and E1 account for less space but have nevertheless seen increases of 350% and 230% respectively.
Competition has also increased as serviced office providers have risen by a quarter since 2004. However, 75% of the market share remains with the top 10 operators.
Demand for serviced offices is expected to rise further with increasing numbers of SMEs looking for flexibility in their office space.
Giles Fuchs, chief executive at serviced office provider Office Space in Town, said: “Serviced offices open up the market to a huge number of occupiers and so there is a long way to go before we see the market reaching saturation.”
Fuchs also highlighted how, as the serviced office market continues to grow, the problem of valuation is becoming more pronounced.
He said: “In 40 years of serviced offices there is still no set method of valuation. Hotels and student accommodation have their own asset class. Agents are desperate to find a way to value serviced offices.”
Office Space in Town is currently working on a new method of valuing serviced offices and news on its development is expected in the summer.
