Flex office portfolio values fall £1.4bn in ‘temporary’ dip

The value of Britain’s biggest serviced office companies’ property portfolios has taken its first hit – though it is likely a blip amid years of dramatic growth, according to data. Portfolio values of flex operators such as WeWork, IWG, The Office Group and others dropped by £1.4bn in the 2020-2021 financial year to £24.3bn, a study by law firm Boodle Hatfield found. The past five years have still seen the value of property owned by serviced office providers grow by more than 300% from just £5.9bn, including long leaseholds. That pattern is expected to resume in the coming years. The dip in value was largely as a result of global closures and sell-offs during the pandemic, as the flexible working sector tried to insulate itself from the financial downturn caused by lockdowns. David Rawlence, Associate at Boodle Hatfield, said: “Despite the doom and gloom surrounding the office sector during Covid, the serviced office sector is leaving the pandemic in a healthy state with a consensus that a hybrid working model will see the sector continue to grow. “The pandemic also taught a lot of big office occupiers that having the option to increase and decrease their office space quickly is really valuable – that’s exactly what serviced offices sell. “We expect to see more traditional office landlords expand their own serviced office arms – such as British Land’s Storey brand. As well as more new entries to the market, we are seeing consolidation among existing players as they seek to rapidly scale up.” To send feedback, e-mail alex.daniel@eg.co.uk or tweet @alexmdaniel or @EGPropertyNews Image © Yuri Kageyama/AP/Shutterstock