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Serviced Offices - UK - October 2018

“As the flexible workspace sector continues to evolve, the hybrid model, where providers offer a mix of co-working spaces and private offices, is set to become more prevalent among serviced office providers.
The shift towards hybrid space reflects the eagerness of serviced office providers to target a wide range of clients, with an increased focus on offering agility and options to occupiers of all sizes. Companies are also increasingly looking beyond a private office or dedicated co-working space, seeking hybrid environments that offer businesses both private office space and a more collaborative environment.”
– Claudia Preedy, B2B Analyst

This Report looks at the following areas:

  • Trend towards flexible working set to continue to drive and shape demand for serviced offices
  • Growing number of traditional property owners are exploring serviced offices to diversify their portfolios

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Growth in UK serviced offices market continues at pace
              • Figure 1: UK market for serviced offices, 2013-18
            • Growth in start-ups is driving and shaping demand for flexible work spaces
              • Figure 2: Number of newly incorporated companies in the UK, Q1 2015-Q2 2018
            • Growing trend towards hybrid offices
              • Number of serviced offices expected to rise by 39% between 2018 and 2023
                • Figure 3: Forecast number of UK services offices, 2019-23
              • Companies and brands
                • IWG remains largest player in UK serviced offices market but feels heat from new, agile market entrants
                    • Figure 4: UK serviced office providers, by number of locations, 2018
                  • What we think
                  • Issues and Insights

                    • Trend towards flexible working set to continue to drive and shape demand for serviced offices
                      • The facts
                        • The implications
                          • Growing number of traditional property owners are exploring serviced offices to diversify their portfolios
                            • The facts
                              • The implications
                              • The Market – What You Need to Know

                                • Increased demand for flexibility drives growth in UK serviced offices market
                                  • Growth in start-ups drive and shape demand for flexible work spaces
                                    • Number of serviced offices expected to rise by 39% between 2018 and 2023
                                    • Market Size

                                      • Introduction
                                        • The customer
                                          • The supplier
                                            • Continued growth across UK serviced offices market
                                                • Figure 5: UK market for serviced offices, 2013-18
                                                • Figure 6: UK market for serviced offices, 2013-18
                                              • Growth is spreading to regional hubs
                                                  • Figure 7: UK market for serviced offices, by city, 2017
                                                  • Figure 8: UK market for serviced offices, by city (excl. London), 2017
                                              • Market Forecast

                                                • Increased demand for flexibility from start-ups, SMEs, and large corporations will remain a key driver of growth in the serviced offices market
                                                  • Competition set to intensify
                                                    • Number of serviced offices expected to rise by 39% between 2018 and 2023
                                                        • Figure 9: Forecast number of UK services offices, 2019-23
                                                        • Figure 10: Forecast number of UK serviced offices, 2019-23
                                                    • The Impact of the Economy

                                                      • UK economy continues steady growth despite Brexit uncertainties
                                                        • Figure 11: Growth in UK economic output, Q1 2014-Q2 2018
                                                        • Figure 12: Growth in UK economic output, Q1 2014-Q2 2018
                                                        • Figure 13: Forecast GDP development. 2017-22
                                                      • Falling business confidence raises some concerns
                                                        • Figure 14: Business confidence index, per half-year, 2007-17
                                                        • Figure 15: Business confidence index, per-half-year, 2009-18
                                                    • Market Trends

                                                      • Trend towards hybrid workspaces set to continue
                                                        • Providers look to enhance service offering as industry moves towards “space as a service” model
                                                          • Promotion of collaborative and community-driven values
                                                            • Non-office buildings become flexible work spaces
                                                            • Market Drivers

                                                              • Overview
                                                                • Trend towards shorter and more flexible office lease structures
                                                                  • Remote working on the rise as flexible working practices and self-employment increase
                                                                    • Figure 16: Number of home workers in the UK, January to March, 2012-17
                                                                    • Figure 17: Number of homeworkers in the UK, January to March, 2013-17
                                                                  • Rapid rise in self-employment since 2008
                                                                    • Figure 18: Self-employed workers in the UK, 2006-17
                                                                  • Growth in start-ups, especially in tech sector, are driving and shaping demand for flexible work spaces
                                                                      • Figure 19: Number of newly incorporated companies in the UK, Q1 2015-Q2 2018
                                                                      • Figure 20: Number of newly incorporated companies in the UK, Q1 2015-Q2 2018
                                                                      • Figure 21: Business start-ups in the UK, by sector, 2015-16
                                                                      • Figure 22: Business start-ups in the UK, by region, 2012-16
                                                                    • Dominance of millennials in the workplace will dictate future space design
                                                                      • New lease accounting standard is likely to boost demand for flexible workplaces
                                                                        • Uncertainty surrounding Brexit leads to increased demand for flexible workspace
                                                                          • Business rates revaluation has biggest impact on London office sector
                                                                            • Key regional cities increasingly drive growth in serviced offices market
                                                                                • Figure 23: Average workstation rates in key cities the UK, by city, 2017
                                                                                • Figure 24: Average workstation rates in key cities the UK, by city, 2017
                                                                              • Prices continue to rise across the commercial property rental sector
                                                                                • Figure 25: Price index for companies operating in the property rentals industry, Q1 2013-Q2 2018
                                                                                • Figure 26: Price index for companies operating in the property rentals industry, Q1 2013-Q2 2018
                                                                            • Companies and Brands – What You Need to Know

                                                                              • Traditional serviced office providers adopt new business models in response to changing workspace needs
                                                                                • IWG remains largest player in UK serviced offices market
                                                                                  • WeWork increasingly targets larger companies to challenge traditional landlords
                                                                                    • Increasing number of providers now provide hybrid offices
                                                                                    • Industry Structure

                                                                                      • Industry development
                                                                                        • Traditional serviced office providers adopt new business models in response to changing workspace needs
                                                                                          • IWG remains largest player in UK serviced offices market but feels heat from new, agile entrants
                                                                                              • Figure 27: UK serviced office providers, by number of locations, 2018
                                                                                              • Figure 28: UK serviced office providers, by number of locations, 2018
                                                                                            • Rising demand for flexible workspace drives acquisitional activity
                                                                                              • Growing number of traditional property owners are exploring serviced offices to diversify their portfolio
                                                                                                • Institutional investors start to see the opportunities offered by serviced offices
                                                                                                • Competitive Strategies

                                                                                                  • Acquisitional activity and consolidation
                                                                                                    • I2 Office buys rival serviced office group Landmark and subsequently rebrands its network as Landmark
                                                                                                      • IWG (formerly Regus) uses acquisitional route to move into co-working sector and expand its product offering
                                                                                                        • Portfolio differentiation and diversification
                                                                                                          • WeWork increasingly targets larger companies to challenge traditional landlords
                                                                                                            • Bruntwood focusses on key regional markets it knows and owns a concentrated portfolio in markets where ownership is otherwise fragmented
                                                                                                              • Citibase focusses on cost-conscious small businesses across UK towns and cities
                                                                                                              • Company Profiles

                                                                                                                • Bizspace
                                                                                                                  • Recent company activity
                                                                                                                    • Company strategy
                                                                                                                      • Financial performance
                                                                                                                        • Figure 29: Financial analysis of Bizspace, 2013-17
                                                                                                                      • Bruntwood
                                                                                                                        • Company strategy
                                                                                                                          • Financial performance
                                                                                                                            • Figure 30: Financial analysis of Bruntwood Group, 2013-17
                                                                                                                          • Citibase
                                                                                                                            • Corporate restructure
                                                                                                                              • Company strategy
                                                                                                                                • Financial performance
                                                                                                                                  • Figure 31: Financial analysis of CBLH, 2013-17
                                                                                                                                • Landmark Space (formerly i2 Office)
                                                                                                                                  • Company strategy
                                                                                                                                    • Financial performance
                                                                                                                                      • Figure 32: Financial analysis of Landmark Space, 2013-17
                                                                                                                                    • London Executive Offices
                                                                                                                                      • Company strategy
                                                                                                                                        • Financial performance
                                                                                                                                          • Figure 33: Financial analysis of London Executive Offices, 2013-17
                                                                                                                                        • IWG/Regus
                                                                                                                                          • Company strategy
                                                                                                                                            • Financial performance
                                                                                                                                              • Figure 34: Financial analysis of IWG plc, 2013-17
                                                                                                                                              • Figure 35: Geographic turnover analysis of IWG plc, 2015-17
                                                                                                                                            • WeWork
                                                                                                                                              • WeWork is now London’s largest private renter of offices
                                                                                                                                                • WeWork increasingly targets larger companies to challenge traditional landlords
                                                                                                                                                  • Financial performance
                                                                                                                                                    • Figure 36: Financial analysis of WeWork, UK, 2014-16
                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                    • Abbreviations
                                                                                                                                                      • Methodology
                                                                                                                                                      • Further Sources and Contacts

                                                                                                                                                        • Trade associations
                                                                                                                                                          • Business Centres Association
                                                                                                                                                            • Trade magazines
                                                                                                                                                              • Commercial Property Monthly
                                                                                                                                                                • Estates Gazette
                                                                                                                                                                  • Property Week
                                                                                                                                                                    • Trade events
                                                                                                                                                                      • Work 2.0 2019

                                                                                                                                                                      Serviced Offices - UK - October 2018

                                                                                                                                                                      US $1,343.55 (Excl.Tax)