The number of flexible workspaces in the UK has increased over the past 12 months, leading to a decline in desk rates in the capital.
The number of workspaces in the UK – including serviced offices and co-working developments – stands at 5,972, according to a report from the Instant Group.
This figure includes 1,423 in London alone.
It also marks a 12% year-on-year increase in the UK, up from 5,320 in 2018, and a 17% increase in London supply.
The growing supply has contributed to a drop in desk rates, with London’s average achievable desk rate standing at $844 (£655) per month in 2018 – a 6% decline.
London has the greatest number of flexible workspaces in the world, followed by New York with 548 and Hong Kong with 322.
New York is the most expensive market per desk, given its constrained Manhattan city centre, despite a 4% decrease in desk rates to $1,063 per month.
London desk rates are declining as co-working operators head further out of the centre and charge lower rates. For instance, the Office Group opened its flagship flexible workspace in Vauxhall last year following a major refurbishment.
Pricing has also cooled in a number of other major cities in the past year, with the average desk rate down 5% on average. Cities where market pricing has decreased are predominantly in the US and Europe.
In contrast, the Asia-Pacific region is on an upswing, with Tokyo’s desk rate growing the most sharply of all cities recorded. Japan’s capital saw average rates rise by 19% to $991 per month.
Mumbai, Melbourne, Sydney, Honk Kong and Shanghai also posted increases.
James Rankin, head of research and insight at the Instant Group, said: “The growth in supply of flex space has been the number-one story in commercial property markets around the world.
“There is more growth to come as client awareness of non-lease options increases the search for more choice in the market. We have only seen the tip of the iceberg for larger corporate requirements as companies look to flex 20% of their portfolios or more.”
The future
Going forward, the APAC market is expected to overtake Europe, Middle East and Africa from a supply volume perspective during 2021, according to the report.
Currently, APAC has 11,592 flexible workspace centres against EMEA’s 12,773 and the Americas’ 8,707.
However, in 2021 APAC is expected to lead the charge with 16,100, followed by EMEA with 15,500 and the Americas with 11,500.
While EMEA is currently the largest market by number of major city centres, the report says there could be a push out of large cities into the suburbs.
The report says: “We expect to see far more disaggregated expansion into secondary and tertiary locations.
“Already this year we have seen record levels of supply in regional cities across western Europe as local companies and satellite offices of major corporate firms start to look towards alternative locations for their next business cycles.”
The report adds that higher city centre rates are encouraging some companies to look further afield as their operations and workforces become more mobile.
For example, this week it has emerged that Citigroup is looking to take on a second office in Belfast.
The bank has appointed Cushman & Wakefield to explore the area for an additional 100,000 sq ft-plus office. Citi currently already occupies 133,000 sq ft at the Gateway building, which it bought in April from Titanic Quarter.
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