COVID-19 drives demand for serviced offices and virtual offices

A newly published report notes how COVID-19 has driven demand higher for serviced offices in the UK, along with virtual offices for people working from home.

The IBISWorld study was updated in mid-October to reflect the impact of the pandemic, and notes that the UK serviced offices market is “at your service” at a time of rising demand for flexible office space.

Looking at the past five years, the analyst found average industry growth of 17.4% driven in part by economic uncertainty.

The report estimates the UK serviced offices market size at 3,960 individual businesses, employing nearly 5,700 people nationwide.

It places the current market value at £3 billion, an indication of the value of serviced offices the length and breadth of the UK for the nation’s economy.

And with businesses big and small looking towards the post-pandemic phase, the study predicts that many will opt for the flexibility of serviced offices in the UK once again.

Looking ahead to 2025

Despite the significant damping effect of the pandemic on the UK economy, IBISWorld predict that the UK serviced offices market will continue to grow.

“The serviced offices industry is anticipated to continue expanding over the next five-year period as more companies opt for the flexibility and increasing suitability of serviced offices,” the report states.

It adds that after the global financial crisis, there was a period of uncertainty during which serviced offices were “a popular alternative to renting an entire office space on a permanent basis”.

This appeal applies to tenants large and small, including individuals and SMEs who want to work in a collaborative environment, and large firms looking to avoid taking on the risk of a long lease.

During the pandemic, in conventional commercial premises, “existing tenants have attempted to defer rental payments and seek to break leases early in order to preserve cashflow”.

Serviced offices provide more flexibility, allowing companies to manage their expenditure on premises more carefully and with greater granularity, rather than being locked into a high-cost contract over a long period of time.

The immediate future

The middle of the decade might still seem a long way away, but prospects are bright for 2021 with vaccinations underway, and the UK serviced offices market is showing positive signs too.

According to IBISWorld:

  • Some companies are seeking additional premises to support social distancing.
  • Others want more flexible short-term leases due to economic concerns.
  • UK virtual offices may also benefit from the government’s request to work from home.

Together, these trends are driving demand higher across the spectrum of the sector, which includes not only serviced offices and virtual office services, but also UK meeting rooms for hire.

Revenues from providing serviced offices account for just over two fifths (41%) of the industry’s economic activity – an indication that hired meeting rooms, conference rooms and virtual office services for homeworkers all make a significant contribution too.

Serviced Office Company proudly provide serviced offices, virtual offices and meeting rooms in Manchester and London, and will continue to support our tenants into 2021 and beyond with contemporary, furnished office spaces and meeting rooms on flexible terms.

One in six flexible workplaces is in the UK

The UK has embraced flexible workplaces, whether they are serviced offices and meeting rooms, hotdesking facilities, or shared workspaces for freelancers and sole traders.

Now research has revealed the true extent of the UK’s flexible workplace sector in a year disrupted by the COVID-19 pandemic, and which has left the sector looking towards a brighter future.

Commercial real estate consultancy Cushman & Wakefield published Coworking 2020: What’s Next on the Flexible Workspace Horizon? in October and predicted that the outbreak will trigger a “5th revolution” for flexible workplaces, following a period of pandemic-induced recession.

UK flexible workplaces in numbers

The report’s headline figures show how UK flexible workplaces cater to an internationally significant market:

  • 5,923 flexible workspaces in the UK
  • New premises opened every 5 days in London
  • 17% of the world’s flexible spaces are in the UK

While COVID-19 may have slowed the rate of growth temporarily, the sector is looking towards emergence from the pandemic as infection rates fall and vaccination rates rise.

And flexible workplaces are not only for sole traders and SMEs, as the report found 63% of global organisations also make use of coworking spaces somewhere in their commercial real estate portfolio.

COVID-19 and coworking

There are signs that the response to COVID-19 could lead to increased uptake of coworking spaces for many companies.

According to the report, previous recessions have been “a catalyst for growth in the flexible workspace sector”.

COVID-19 could follow the same pattern as businesses look to bounce back as quickly as possible from any negative economic impacts.

The report cites several advantages of flexible workspaces for companies coming out of the COVID-19 era:

  • Increased flexibility
  • Reduced capital investment
  • Better customer experience

It adds that flexible workplaces are “a multi-faceted, flexible solution to UK occupiers’ safe return to the office in the short term”.

New serviced offices in London

Serviced Office Company’s own newly opened Business Centre in London offers coworking and collaborative spaces, as well as privacy when it is needed.

We opened the new Business Centre in Tower Hamlets in August, providing the capital with more much-needed open-plan business space where individuals and teams can collaborate safely while observing all relevant social distancing recommendations.

In the near future, we hope social distancing will no longer be necessary, as more of the UK’s working-age population receives one of the vaccines against COVID-19.

But beyond that time, as the UK economy gets back on track, our meeting rooms and serviced offices in London and Manchester will continue to provide companies of all sizes with essential places to meet and work.

Plan for the future now

To find out more about our serviced offices in Manchester and London, contact the Serviced Office Company today.

Our locations include Pepper Street and Millharbour Court in London, Exchange Quay and Clippers Quay on the boundary of Manchester and Salford Quays.

From these premises, we provide serviced offices, meeting rooms for hire and virtual office facilities for people working from home.

Whatever option works best for you, get in touch and we can help you get your workspace ready for a bright future as we all move together into the post-COVID era.