A few months down the line, what impact is the Brexit vote having on flexible office space trends in London?
Love it or hate it, you simply can’t avoid it. Brexit is shaking things up for British startups, who now face big decisions on how to move things forward.
Historically, companies have benefitted from serviced flexible office space during times of uncertainty in the economy and legislation. The thinking behind this is simple; why risk investing in long-term leases when the exact nature of the future is uncertain, when you can instead opt for a one year – or even one month – short term licence at a fully serviced office space until things become clearer?
Increasing demand for short-term space
This is exactly the trend that London, and other parts of the UK, are now experiencing since the Brexit vote in June 2016. In October, the Financial Times reported that increasing demand for short-term space had sparked a £700 million sale of a luxurious serviced office portfolio as its private equity owners – Queensgate Investments – sought to “cash in” on rising demand for imposing yet flexible office space in the City, Mayfair and Belgravia.
Queensgate said it had experienced a “spike in demand” from office tenants seeking short-term space since the Brexit vote. “People are seeking flexibility and shorter lease terms” said the company’s chief executive, Jason Kow. While its serviced offices are designed to appeal to companies in search of exclusivity and period architecture, other co-working companies such as WeWork have grown rapidly by targeting startups, which favour exposed brickwork, free beer and cheaper rents.
Right across the country
The trend in London is reflected in other parts of the UK too. According to workspace provider Regus, the uncertainty surrounding post-Brexit trading has led to a growth for flexible office space in a number of cities across the UK, with Manchester reporting an increase of more than 60 percent in enquiries from June to August.
Photo credit: The Beehive, Manchester
The Office Group has also reported that the post-EU poll result has boosted demand for flexible office space. The company’s chairman Lloyd Dorfman told the Evening Standard in September that 98 companies had already signed up to post-referendum deals to rent space with the company, including Coca-Cola who would be joining the likes of Facebook and Santander.
“Early evidence shows that Brexit has been good for us because the uncertainty around what will happen has made flexible office space more attractive. At the moment companies are more comfortable committing to shorter leases” Dorfman said.
Playing the waiting game
One of the long-term effects of the Brexit vote could be that rents begin to fall across London. If this is the case then it’s good news for startups operating out of short term, flexible office space as you’ll be able to reassess once the leased market rental prices have fully adjusted and a post-Brexit calm begins to provide clarity to business owners.
