Managed offices lead flex market expansion

The UK flex office market continued its expansion despite the current macroeconomic headwinds, thanks in part to a boom of managed offices. While increased supply did lead to a 1.2% quarter-on-quarter fall in the national median desk rate to £500 in Q1, this was still a 2.2% increase year-on-year, according to a report from online flex marketplace Rubberdesk. The managed office market grew by a whopping 111% in the year finishing 31 March, which helped push the wider flex market’s growth to 32% during the same period. Managed office quarterly growth for Q1 also outstripped that in serviced offices, with each registering 10.6% and 6.1%, respectively. “This surge in managed offices supply reflects a dual dynamic,” said Tom Petryshen, head of growth and analytics at Rubberdesk: “Firstly, tenant demand for customised, private flexible solutions is strong, particularly from larger enterprises navigating economic uncertainty and hybrid work models. “Secondly, landlords are also actively contributing to this supply increase. Facing reduced demand for traditional 5-10-year leases, property owners are increasingly adopting managed solutions to meet evolving occupier needs and maintain occupancy.” The wider flex market picture varies across the country, with some cities experiencing greater growth than others. London dominates the market with roughly three-quarters of the market. The capital saw desk rates remain stable quarter-on-quarter at £625, despite seeing a sharp increase in available space at 7.7% quarter-on-quarter and an increase of nearly two-fifths year-on-year. Petryshen added: “Regional differences provide an interesting and varied picture. Within the largest market, London, there are marked differences by area, with central London showing a significant space increase (of 27.1% QoQ) alongside a rate decrease. South London showed increases in both space and rates, whereas east and west London show rates holding steady even in the face of an increase in space.” Manchester, meanwhile, at £379 saw modest growth of 1.1% quarter-on-quarter and 5.3% year on year, even as availability rose 12.1% in the quarter and 17.7% over the year. Birmingham similarly saw desk rate growth of nearly a quarter year-on-year as availability fell by more than a fifth over the year. Cardiff, however, saw a sharp drop to £178 per desk, which reflected a decline of 20.9% year-on-year even as availability remained relatively stable. Image © Headway/Unsplash