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UK Serviced Offices Market Report

Everything you need to make the right decisions

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

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

For the purposes of this Report, Mintel has used the following definitions:

Serviced offices are commercial buildings providing short-term contract accommodation, including reception services, furniture, telephony and information technology infrastructure.

MBD’s definition includes serviced offices, semi-serviced offices, business centres and managed workspace.

The serviced offices industry has also incorporated ‘flexible workspace’ into its overall description due to the increasing hybridisation of workspace, which reflects continuing changes in business needs and shifting demand towards co-working and increased flexibility. Serviced office providers increasingly offer hybrid offices, providing private space such as those found in serviced offices, mixed with open, co-working spaces and flexible membership options.

For the purposes of compiling the market size, third place locations (work spaces for drop-in customers rather than dedicated office space) and purely co-working spaces (work spaces, usually pay-as-you-go, dedicated as a shared working environment) are excluded. However, these types of accommodation are considered when analysing market trends, commercial opportunities, and operators’ performance.

Serviced offices are fully fitted and furnished. The operator is not only responsible for the building maintenance, but also provides a range of business services, which may include meeting and conference facilities, and support services - from catering to presentation equipment, reception, secretarial and clerical services, IT and telecommunications support, video conferencing and internet access. This enables clients to occupy the premises and outsource costly internal operations.

All of the values quoted in this report are at current prices unless otherwise specified.

Company profiles

  • Bizspace
  • Bruntwood
  • Citibase
  • Landmark Space (formerly i2 office)
  • London Executive Offices
  • IWG/Regus
  • WeWork

What you need to know

The serviced office industry is one of the fastest growing sectors in the UK property market. Since the global recession, many businesses have started using serviced offices because of their cost efficiency, flexibility and practicality.

In London and key regional cities, serviced office providers are now competing with an explosion of co-working spaces from the likes of WeWork, Workspace and TOG. Many co-working brands offer additional perks, such as free beverages, and professional and social events, which help to develop a strong community to support collaboration. In response to the increased popularity of co-working spaces, traditional serviced office providers have had to innovate and diversify their offering to create clearer and more distinctive customer offers.

A growing number of serviced office providers now provide hybrid offices that offer private space such as those found in serviced offices, mixed with open, co-working spaces and flexible membership options.

Expert analysis from a specialist in the field

Written by Claudia Preedy, a leading analyst in the B2B sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

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

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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