The march of the flexible workspace is evolving and is set to further penetrate the office market says real estate advisor Cushman & Wakefield, in a new report, Coworking 2019: The UK Flexible Evolution Continues.
Despite political headwinds, flexible workspace operators let more than 1.2 million sq ft of space across 40 transactions in Central London during H1. If letting activity progresses at the same rate for the remainder of 2019, Cushman & Wakefield predicts flexible workspace take-up to exceed two million sq ft for a third successive year.
While there has been a small decline in flexible workspace take-up from the record levels seen in 2017, the total number of transactions is increasing year-on-year (63 in 2017; 77 in 2018).
The average transaction size consequently fell 41% year-on-year to 26,010 sq ft in 2018. This is due to the fact that new entrants to the market (e.g. Knotel) are offering a different model and are consequently taking smaller amounts of space. In parallel, the average deal size of some of the more established operators has also reduced slightly following a series of significantly large deals in recent years.
Emma Swinnerton, EMEA Head of Flexible Leasing Solutions at Cushman & Wakefield, said: “It is worth remembering that while we have witnessed accelerated growth in the last few years, the flexible workspace market in its current guise is still in its relative infancy. The sector will continue to grow and drive change in the UK office market as we see new operators emerge, traditional landlords diversify, and the expectations of office workers climb towards a hospitality model.”