Demand for flexible office space has more than trippled since pre-covid, says Workthere

Flexible office specialist Workthere has reported a 206% increase in UK enquiries for flexible office space compared to pre-Covid levels, and a 14% increase year-on-year (y-o-y) in the first half of 2024. 

Workthere notes that key factors driving this rise in demand in H1 2024 are the increasing number of occupiers that are looking for larger workplaces, those characterised by requiring 20 desks and above, as well as companies establishing themselves in new markets. In H1 2024, the former accounts for 24% of enquiries compared to 12% y-o-y, while the latter make up 18% of enquiries (10% y-o-y). Notably, swing space and project space requirements accounted for only 13% of enquiries, down from 20% in H1 2023, indicating the drive to flexible office space as a longer-term solution for occupiers. 

According to Workthere, the average cost of a private desk in London within the flexible office market is £805, which is up 12% y-o-y. This rise can be attributed to a “flight to quality” with the top end of the market driving average price growth. The flexible office broker’s research shows that pricing across the rest of the UK is at £379 per private desk, marginally up on H1 2023 figures. 

Workthere notes that H1 2024 has seen a number of new schemes in London which is boosting market supply and that there are a number of schemes in the pipeline in the rest of the UK with new entrants and expansions of existing operator portfolio’s, reflecting the increasing size of the flexible office market. The flexible office specialist confirms that although the new schemes in London have aided overall rental growth, slighter older schemes have lost some occupancy, affecting the market average. This is evidenced by Workthere’s research, which shows that occupancy levels for flexible office space in London dropped slightly to 82% from 88% at the end of H1 2024 and to 83% from 86% in rest of the UK.  

Tom Leahy, Co-Head of Workthere UK, comments:

“The strong increase in demand that we have seen is testament to the resilience that the flex market has shown over the last few years, indicating strong appetite and confidence in the sector. This increased demand is resulting in upward pressure on desk prices, especially for best-in-class space in London. There has been an overall slight fall in occupancy, which is a reflection of the increasing size of the market and the growing polarisation against more secondary space.  

“Desks throughout the rest of the UK remain competitively priced as operators seek to retain occupancy against growing competition. In addition, we have also seen a need from operators across the market to pass on some of the rising costs they are facing to occupiers as a result of inflation, which is also pushing up the desk prices. In the second half of the year, we are expecting no let-up in the popularity of the flexible office market and continued delivery of exciting new schemes across the whole of the UK.”  

Workthere’s research shows that the average contract term length in H1 2024 was 15.6 months, which is up 27% year-on-year, with a notable increase in companies seeking 24 month contracts indicating that businesses are seeing flexible office solutions as a core part of their strategy.