Co-working is fast becoming a more popular alternative to leasing traditional office space.The number of co-working spaces has doubled worldwide over the past 2 years with an increase of 36% in the last 12 months alone according to BCA report 2017, proving the popularity of this new and flexible way of working in not only London but across the UK.
The rise of the millennial workforce and the growth of better technology is over time altering the way people work, with millennial’s putting far more emphasis on collaboration and networking, finding it empowering to work in a co-working environment where they feel more in control of their work day further encouraging creativity and productivity.
Traditional office leasing vs co-working
The growth of co-working has seen the traditional serviced office providers have to alter their strategies to remain profitable and many now offer far more collaborative office space than in previous years. However, looking at the London market it is clear that there is enough demand currently for both co-working space and the more traditional model types of office.
Co-working is a solution that encourages interaction and networking but can lack privacy and this is something that does not appeal to all businesses. The model works fantastically well for new business, assisting to grow relationships, network and host events along with offering the potential to add flexibility and drop-in facilities.
Is co-working expensive?
If you look at it on a per sq ft basis then yes it appears to be expensive against more traditional leased office space, but the key to co-working and the flexible model is to look at what is included in the whole package. You will always pay a slight premium for flexibility and against a lease it is argued that this is around 20%. That said, given the growth in co-working we feel costs are comparable with renting an office.
How sustainable is it?Solely co-working businesses with only 1-2 sites will find it difficult to scale up and the fear is that occupiers in these centres will move across to some of the larger co-working providers given the networks on offer and the potential to work out of different sites. In time, you may find these providers are simply absorbed within the larger providers.
Do we see any other entrants?
In the past more traditional landlords saw the flexible space providers as somewhat of a risk due to the flexibility they offered, a high churn of occupiers and potential for them to not be a success within a particular building.
More recently we are seeing increased interest from landlord’s to have a flexible space provider within a building to offer an amenity for other occupiers, allow for greater flexibility and also create a selling point and good atmosphere within a building.
Many occupiers nowadays see it as extremely important to have flexible space within any building they look at as it gives them options to expand should they need to without having to leave the building.