Survey reveals increase in enquiries for Irish serviced offices despite drop in occupancy

In April, Workthere launched the ‘Workthere Global Flexible Office Sentiment Survey’ in order to better understand how COVID-19 is impacting flexible office markets around the world. We have continued to conduct this research monthly in order to track sentiment and key statistics about the flexible office market throughout the pandemic.

This article looks at the key findings of the survey from Irish flexible office providers and compares how sentiment has changed throughout the pandemic, comparing the responses received in the surveys conducted in April, July and October. It is, however, important to note that October’s survey was conducted before the nationwide Level 5 lockdown was introduced, and we acknowledge this may have impacted the current sentiment.

Sentiment

In April, Irish flexible office operators were largely optimistic about the prospects for the sector, with 50% of respondents stating they were optimistic for the next 3 months, and the same amount stating they were optimistic for the next 12 months. This compares to just 25% of flexible office providers globally stating they were optimistic for the sector over the next three months, but 62% saying they were optimistic for the next 12 months.

By July, optimism for the sector over the next 3-months decreased to 43%, however long-term sentiment had significantly improved, with 71% of Irish flexible office operators stating they were optimistic about the prospects for the next 12 months. This highlights that the difficult market conditions faced by Irish flexible office providers in Ireland throughout the summer had eroded short-term confidence but continuing belief that the sector would rebound in the long term remained.

In October, optimism for the next 3-months had rebounded to 55%, and over 12-months had increased again to 78% of all respondents stating they were optimistic, demonstrating that positivity for 2021 remains.

Key Statistics

In July, building occupancy was at an average of 43% as people started to return to the office; this dropped to an average of 29% in October. This counteracts the global trend of building occupancy slowly increasing. This is not surprising – most serviced office stock resides in Dublin City, where Level 3 restrictions have been in place since the end of September and many people were asked to again work from home.

The proportion of members not renewing their contracts has increased notably to 22% in October, up from 15% and 14% in April and July respectively. Again, this is not too surprising with the increasing lockdown restrictions that have been looming, uncertainty often brings cautiousness.

Encouragingly, the percentage of members asking for rent relief has continued to drop, with 28% requesting support in October, compared to 36% in July and 40% in April. Irish companies are, however, still higher than the global average of 22% in that respect.

Enquiries

The number of enquiries has recovered to 48% of normal levels in October, up from a low of 29% of normal levels in April, but not significantly higher than July which stood at 46% of normal levels. This still falls short of the global average of 54%.

In October we also asked flexible office providers for a break down of the type of enquiries they were seeing in order to track the demand for flexible office spaces. 56% of Irish respondents said they were seeing most demand for suburban office space, far higher than the 31% of respondents globally who stated the same. We believe this to be due to an increase in enquiries from individuals who have grown tired of the ‘Work from Home fatigue’ and are seeking a small office close to their homes and larger companies who are re-evaluating their office footprint and exploring options for a ‘hub and spoke model’. We expect the higher adoption of this model to increase the demand for suburban flexible offices in the short-term, and in the long-term too, as a portion of workers will likely have the ability and desire to make these working arrangements permanent.

It is still a challenging time for flexible offices in Ireland but there are promising signs of recovery in terms of increasing enquiries, fewer companies asking for rent relief and improving sentiment from providers, both long term and short term. The Level 5 nationwide lockdown will undoubtedly cause further disruption to the sector, and we will continue to run this survey on a monthly basis in order to track sentiment and key statistics as the pandemic continues to unfold.