COMPETITIVE DESK PRICES DRIVE LONGER LEASE TERMS IN FLEXIBLE OFFICE SECTOR

According to the latest market snapshot from Workthere*, the average cost for a private desk in flexible office space across the UK was £463, representing a 13% decrease on the figure recorded in 2019. The flexible office specialist, notes that London in particular saw a notable decrease from £606 in 2019 to £515 in 2020. However, in contrast to the drop in desk prices, lease terms for flexible space across both London and the whole of the UK have increased over the same time period, up 12% to 13.6 months and 6% to 12.5 months respectively

Jack Williamson, head of Workthere UK, comments: “Obviously the impact of lockdowns and movement restrictions over the last 11 months have had a significant impact on occupier appetite for flexible offices and, as a result, we have inevitably seen providers reduce prices for private desks in order to attract and retain new customers. At the same time we have also seen a rise in the length of the lease terms that occupiers are agreeing to, which demonstrates the appeal and conditions of these competitive prices and the commitment that occupiers are prepared to make in the long term for flexible space.

“As we move into the second part of the year and activity levels accelerate as a result of pent up demand, we do expect the these more competitive pricing terms to start to increase back towards pre-pandemic levels.”

In terms of demand, the research shows the average number of desks required by Workthere clients across the UK in 2020 was 11, which showed a slight decrease on the 2019 average of 13. However, some cities did show an increase with Birmingham accounting for the largest average desk requirement of 13 and Manchester rising to 10. London, Reading, Cambridge and Bristol all saw a slight decrease with an average desk requirement of 13, 9,4 and 5 respectively.

Interestingly, it was new businesses that made up the greatest proportion of Workthere’s new enquiries in 2020 accounting for 16%.

Overall take-up** by flexible office operators in the UK was understandably significantly down yoy at 233,033 sq ft (-79%) as providers took stock of the circumstances. Although 2020 did see more evenly distributed take-up from providers across London with the West End representing 124,000 sq ft and the City seeing 108,000 sq ft of take up. Comparatively, the City accounted for 69% of take-up by flexible office operators in 2019. Outside of London, it was Cambridge that saw the largest amount of take-up from flexible office operators at 95,000 sq ft, which was split across three deals to WeWork, Fora and Mantle.