Number of profitable flexible offices in UK increases to 87% as sector continues to climb

In its latest Flexmark report (add link), flexible office specialist Workthere confirms that 87% of UK operators are profitable, with 63% of providers reporting profit margins above 15%, which is 50% higher than the figure recorded in 2021. The report, which surveyed flexible office providers across the globe to provide a benchmark of the sector, also reveals that the number of global operators reporting a profit increased from 82% to 89% yoy.

Now in its third year, Workthere’s Flexmark report offers an insight into the flexible office market pre, during and post-pandemic and shows that occupancy levels on a global scale have recovered across both private and shared offices, which are currently at 81% and 69% respectively, in line with pre-pandemic levels.

Cal Lee, global head of Workthere, comments:

“The growth in profitability has undoubtedly been driven by an increase in demand for flexible offices across the globe. As a result, we have seen occupancy recover to pre-covid levels and desk prices internationally driven up by 7%, compared to a drop by 6% in last year’s survey. Both of these factors, combined with a relatively constrained expansion by flexible office providers, has generated a shift in the proportion of flexible offices that are profitable on an operating level*.”

When looking at occupier type, the Flexmark report confirms that there has been a shift in the demographics of demand demonstrating a greater diversity in the market. Corporates (101+ people) and large scale-ups (21-100 people) have accounted for 42% of take-up globally, which is an increase from 37% in 2021. In the UK, the number of corporates occupying space is 24% compared with 7% in 2021, with small start-ups (2-10 people) accounting for 27% and start-ups (11-20 people) and scale-ups both representing 22%. These figures show that the spread of occupiers types has become more balanced reflecting a greater resilience in the market.

Despite occupancy levels being increased, Workthere reports that 71% of respondents to its Flexmark survey said that their office space is not being used on a maximum capacity basis due to a shift to hybrid working. 78% of providers globally confirmed that members are using space either three or four times a week, which rose to 94% when analysing the UK results.

Jack Williamson, head of Workthere UK, says:

“Given that the UK was one of the first countries to remove restrictions and return to a more normal way of life, it is no surprise that we also have a higher rate of members back in the office for the majority of the week. It would also explain why the UK has a higher utilisation of space with an average of 78% desk space, although meeting and collaboration areas have continued to grow in importance, reinforcing the move towards activity-based working in order to improve wellbeing and productivity.”