10 years on – where is the flex office market now and how does it continue to mature

A lot can change in 10 years and this is certainly true for the flexible workspace sector. If we turn the dial of time back to the Autumn of 2014, the sector was more widely known simply as serviced offices. The dominant brand was Regus, part of IWG, and WeWork was about to open the doors of its first London location at South Bank. The Office Group had existed for 10 years at this point, and, like WeWork, was also about to embark on a journey of super growth in the UK, both pioneering new and different offerings of what an office could be.

Alongside these bigger brands many more current boutique and mid-sized operators also existed, including Orega, I2Office (now Landmark), and LEO (now Argyll Club). As we move the clock back to the current day, we explore how the flexible workspace landscape has changed over the course of the decade. 

10 years of growth 

We have witnessed hyper growth from WeWork, peaking between 2016 and 2019 as they amassed approximately 3.5 million sq ft of space in Central London alone, becoming the single largest tenant in the City. Just behind them is The Office Group who have acquired just over 1.3 million sq ft of space in Central London since 2014. Driving this growth was an undeniable rise in demand from all types of businesses, large and small, as they sought more contract flexibility, space that was ready to occupy and without upfront capex costs, and a selection of great amenities on offer, whether  tea and coffee, community events or Monday croissants, that helped give companies an edge in a growing war on talent. No longer was serviced office space solely supplying the small businesses or parochial corporate office, it was an option for household names such as Amazon, IBM, Google and Meta taking vast amounts of space from WeWork and other operators. 

Changing market perception  

The scale at which the operators were taking space to meet said demand meant the wider office market quickly took notice and it wasn’t long before WeWork in particular was the topic of conversation for any landlord and office leasing agent. 10 years ago serviced offices were often considered a last resort by owners and occupiers, today they are now a fundamental part of an office portfolio, for landlord and occupier.  

New entrants and new offers 

The growth of the operator market has created healthy competition amongst operators to differentiate their offer. We have witnessed an array of new flexible workspace operators enter the market over the course of the last decade, from those with a social purpose at their core, like X+Why and Plus X, those focused on the tech and start-up markets, such as Runway East, Techspace and Huckletree, and those focused on a premium design and amenity offer, such as FORA, Uncommon and Maslow’s. We have also seen the growing emergence of the direct landlord offer. Whilst the likes of Workspace, Bruntwood and even TOG have led the way as owner operators, we saw property heavyweights British Land (with Storey), LandSec (with Myo) and GPE join the growing owner operator class.

Design – no longer is a desk and chair enough 

10 years ago design was differentiated by whether a space was professional or trendy. Today, we have a wealth of different design offers, and more specifically a much stronger amenity offer. The days of a small break-out and kitchen are long gone, with operators now often offering a significant amount of the overall square footage of their location to amenities such as lounge, café/bar, town hall suites, podcast studios and more… 

The solutions on offer in the flex market have also diversified from standard co-working and serviced offices ten years ago to private offices, managed space and fitted / Cat A+ space. The evolution of the sector now sees it offer a suite of solutions for occupiers, which has been accelerated by expanding requirements and corporate standards from a greater variety of occupiers.  

It’s all in the brand  

Over the last decade, WeWork in particular has changed the broader perception of a sector once so synonymous with Regus. Brand recognition has become an increasingly important consideration, and we have witnessed multiple new brands and re-brands in the period for example, Landmark (previously I2 Office) and Argyll Club (previously LEO) and even FORA becoming the lead brand following the merger of FORA and The Office Group. 

Changing nature of deal structures 

Finally, another significant change has been the make-up of how landlords and operators structure their offer. A decade ago only a handful of operators offered management agreements, with the vast majority of the market taking leases. Today the operator landscape looks quite different with management agreements accounting for 50% of flex office deals in 2024.

So what next?  

With growing occupier demand for data whether occupancy or ESG, operators need to mature in providing an accepted level of information, using market technology to capture space performance and customer utilisation. 

As we move into the next decade of flex, it is clear the market is on an upward trajectory with an established position within the office solution spectrum.. In order for this to continue, the sector will need to continue to attract investment , innovate and bring to market differentiated brands that can compete in an increasingly competitive market. We expect the continued growth of the managed solution in all markets as landlords and occupiers alike embrace the outsourced solution further.