2021
9
UK Serviced Offices Market Report 2021
2021-10-13T04:08:26+01:00
OX1050035
1495
143446
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Report
en_GB
“While changes in working practices beyond COVID-19 will result in an overall reduction in office space requirements, offices will still be needed but with a greater requirement for more flexible…

UK Serviced Offices Market Report 2021

£ 1,495 (Excl.Tax)

Description

Providing the most comprehensive and up-to-date information and analysis of the UK Serviced Offices market, including the behaviours, preferences and habits of the consumer.

In 2020, the number of UK services offices grew by just 1%, reflecting the disruption caused by the COVID-19 pandemic. 2021 saw slightly stronger growth of 3%, partly driven by operators expanding in suburban markets.

The pandemic brought widespread disruption to the services office sector in 2020, resulting in occupancy falling dramatically. Serviced office providers quickly adapted to the crisis by implementing safety features and new protocols, keeping services going for those needing to use workspace. Operators also introduced more flexible membership packages to cater for the new environment.

The changes in working practices post COVID-19 will result in an overall reduction in office space requirements. However, the growing popularity of hybrid working models and the emergence of the “work near home” concept is set to contribute to increased demand for high-quality, flexible workspaces. The changes afoot will play to the benefit of the services offices sector as it can offer greater flexibility and agility than the traditional route.

Post COVID-19, creating better collaboration environments, as well as quiet spaces and a focus on features like smarter technology, sustainability and wellbeing, will be more critical than ever. The ability to personalise space and a focus on making spaces multifunctional and adaptable to different kinds of user will also be key. The growth of hybrid working means that work places need to be designed to be appreciably better than working at home.

Read on to discover more details or take a look at all of our UK Industrial market research.

Quickly understand

  • The impact of COVID-19 on the serviced office sector and the opportunities arising from new work practices adopted as a result of the crisis.
  • How serviced office providers are adapting their business models to cater for new hybrid working models.
  • Competitive strategies by key players.
  • How the market is expected to develop over the next five years.
  • Serviced office market research.
  • Serviced office industry analysis.

Covered in this report

Brands: BizSpace, Bruntwood, NewFlex Leases (Citibase), Landmark Space, The Argyll Club (formerly London Executive Offices, IWG/Regus.

Expert analysis from a specialist in the field

This report, written by Claudia Preedy, a leading analyst in the B2B sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

While changes in working practices beyond COVID-19 will result in an overall reduction in office space requirements, offices will still be needed but with a greater requirement for more flexible space and shorter leases. The growing popularity of hybrid working models and the emergence of the “work near home” concept are contributing to increased demand for high-quality, flexible workspaces.
The changes afoot will play to the benefit of the serviced offices sector as it can offer greater flexibility and agility than the traditional route. Post COVID-19, creating better collaboration environments, as well as quiet spaces and a focus on features like smarter technology, sustainability and wellbeing, will be more critical than ever. The ability to personalise space and a focus on making spaces multifunctional and adaptable to different kinds of user will also be key.
Claudia Preedy
B2B Senior Analyst

Table of Contents

  1. Overview

    • Key issues covered in this report
    • COVID-19: market context
    • Economic and other assumptions
    • Covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on serviced offices
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on serviced offices, 27 September 2021
    • The market
    • UK serviced office market shows resilience
      • Figure 2: UK market for serviced offices, 2016-21
    • Increased focus on collaboration, multi-functionality and adaptability of space
    • Rising demand for flexible workspace in the regions and suburban locations
    • Strong demand for flex space post COVID-19 set to drive serviced office market
      • Figure 3: Forecast number of UK serviced offices, 2022-26
    • Companies and brands
    • IWG remains the largest operator in the UK
      • Figure 4: UK serviced office providers, by number of locations, 2021
  3. Issues and Insights

    • Trend of traditional landlords and property owners entering flexible workspace market to be accelerated by COVID-19
    • Serviced offices will benefit from shift to hybrid working models
  4. The Market – Key Takeaways

    • Strong demand for flex space post COVID-19 set to drive serviced office market
    • Increased focus on collaboration, multi-functionality and adaptability of space
    • Rising demand for flexible workspace in the regions and suburban locations
  5. Market Size

    • Introduction
    • The rise of hub-and-spoke and the regional expansion of operators
    • Focus on collaboration, multi-functionality and adaptability of space
    • Short-, medium- and long-term impact of COVID-19 on the serviced office sector
      • Figure 5: Short-, medium- and long-term impact of COVID-19 on serviced offices, 27 September 2021
    • The customer
    • Larger companies are turning to flex space
    • The supplier
    • Trend towards hybrid offices, where operators offer both private offices and co-working spaces
    • Traditional landlords move into flexible workspace sector
    • UK serviced office market shows resilience
      • Figure 6: UK market for serviced offices, 2017-21
      • Figure 7: UK market for serviced offices, 2016-21
    • Desk prices are starting to recover in H1 2021
      • Figure 8: Average cost of renting serviced office space (private and coworking) in key UK cities, 2021
  6. Market Forecast

    • Market drivers and assumptions
      • Figure 9: Key economic drivers affecting MBD’s market forecast, 2019-25 (prepared on 9 July 2021)
    • Forecast methodology
    • Strong demand for flex space post COVID-19 set to drive serviced office market
      • Figure 10: Forecast number of UK serviced offices, 2022-26
      • Figure 11: Forecast number of UK serviced offices, 2022-26
  7. Market Trends

    • “Space as a service” model
    • Post COVID-19, workspaces need to be appreciably better than working at home
    • Emergence of specialists and niche players
    • Interest in out-of-town locations set to increase as workers look to reduce commute
  8. Market Drivers

    • Overview
    • COVID-19 escalates trend towards shorter and more flexible lease structures
    • Large-scale remote working during COVID-19 accelerates shift to hybrid models post-pandemic
      • Figure 12: Proportion of workers that completed some work from home in the UK, 2015-20
    • London had the highest proportion of homeworkers during pandemic
      • Figure 13: Proportion of workers that completed some work from home in the UK, by region, 2020
    • COVID-19 disrupts growth trend in self-employment…
      • Figure 14: Self-employed workers in the UK, 2012-21
    • …But pandemic ignites strong rise in business start-ups
    • UK tech start-up sector shows resilience
      • Figure 15: Number of newly incorporated companies in the UK, 2018-21
      • Figure 16: Number of newly incorporated companies in the UK, 2015-21
      • Figure 17: Business start-ups in the UK, by sector, 2021
      • Figure 18: Business start-ups in the UK, by region, 2021
    • A more dispersed workforce drives regional expansion of operators
    • Providers must cater for a fully diverse workforce with multifunctional and adaptable spaces
    • ESG factors moving up the corporate agenda
  9. Companies and Brands – Key Takeaways

    • IWG continues to hold the largest share of the UK market
    • More landlords set to become a competitor – or partner – to flexible space operators post-COVID-19
    • Operators with a more decentralised portfolio are better placed to adapt to the changing office space requirements post-COVID-19
  10. Industry Structure

    • Industry development
    • IWG continues to hold the largest share of the UK market
      • Figure 19: Key players in UK serviced office market, by number of locations, 2021
      • Figure 20: UK serviced office providers, by number of locations, 2021
    • Consolidation and acquisition activity
    • Trend of traditional property owners and landlords entering flexible workspace market set to be accelerated by COVID-19 crisis
  11. Competitive Strategies

    • IWG reports strong interest in its franchise model, especially in non-city-centre locations, boosted by shift to hybrid working
    • NewFlex launches new “hybrid office” model as more companies look towards a decentralised office portfolio
    • The Argyll Club launches Hub & Flex hybrid working product
    • Bruntwood Works focusses on creating community-focused workspaces
  12. Company Profiles

    • BizSpace
    • Company strategy
    • Financial performance
      • Figure 21: Financial analysis of BizSpace, 2015-19
    • Bruntwood
    • Bruntwood Works launches £50 billion refurbishment scheme to create community-focused workspaces
    • Company strategy
    • Financial performance
      • Figure 22: Financial analysis of Bruntwood, 2016-20 (£ million)
    • NewFlex Leases (Citibase)
    • Corporate restructure
    • Acquisition by Newable in November 2018
    • Company strategy
    • New Citibase Local initiative launched as part of COVID-19 response
    • Financial performance
      • Figure 23: Financial analysis of Newflex Leases, 2016-20
    • Landmark Space
    • Acquisition of Landmark by i2 Office
    • Company strategy
    • Financial performance
      • Figure 24: Financial analysis of Landmark Space, 2017-20
    • The Argyll Club (formerly London Executive Offices)
    • LEO revamps and rebrands business following sale to private investor in 2018
    • Argyll Club is bought out of administration by former owner during COVID-19 crisis
    • Company strategy
    • The Argyll Club launches Hub & Flex hybrid working product
    • Financial performance
      • Figure 25: Financial analysis of London Executive Offices, 2014-18
    • IWG/Regus
    • Acquisitional activity
    • IWG opts for capital-light franchising strategy to accelerate growth and build scale
    • Financial performance
      • Figure 26: Financial analysis of IWG plc, 2016-20
      • Figure 27: Geographic turnover analysis of IWG plc, 2019-20
  13. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Methodology
  14. Further Sources and Contacts

    • Trade associations
    • Flexible Space Association (formerly Business Centre Association)
    • Trade magazines
    • Commercial Property Monthly
    • Estates Gazette
    • Property Week

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

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