A new breed of serviced offices has revolutionised the US office market and is set to revolutionise the sector here, if the recent trends in regional UK cities follow London, a city that has become a global leader for flexible workplaces.
A rise in entrepreneurialism and a growing gig-economy has resulted in a significant shift in the way people work, and where they get work done. Providers of co-working and collaborative spaces have exponentially filled what was once niche but has now become a mainstream demand.
Businesses such as WeWork and Regus, two of the big names providing shared workspaces as an alternative to the traditional office, have fueled the take-up of over 20% of office space across central London in 2017. Competition for space to accommodate this business model is intense across the regional UK cities too.
It seems that shared workspaces as an alternative to the traditional office, and its accompanying lease, will continue to increase in popularity if trends in the top five US co-working markets are to be believed.
New York, Chicago, Los Angeles, Atlanta and Boston have become the top five markets for co-working space in the States, with Atlanta experiencing some of the most rapid growth in the group. In the case of Atlanta, the strain on the traditional office market in that city has resulted in a revival in the suburban office market due to the demand for additional co-working spaces and workplaces closer to home that many workers now demand.
That said, London is now far ahead of New York, with 10.6% of the market being occupied by flexible workplaces compared to an average of 2.9% of the market in Manhattan.
WeWork, just one of a massive range of growing co-working brands, now has the largest volume of space commitments in central London, ahead of Google and Amazon, behind only the Government.
So how does Belfast fit into the puzzle, and how will our local market be affected by this co-working boom?
While we are yet to see any of the big UK or US names take a significant stake in the local market, apart from Regus which has a historic base in the city, independent operators of small to medium scale co-working operations are reporting healthy occupancy and the amount of locations available for co-working in Belfast is increasing rapidly.
It seems only a matter of time before we see significant take-up from one of the top names in the co-working sector, and it will be interesting to see what home-grown operators, that will inevitably roll out larger scale models, will look like as they try to exploit this growing market.
Interestingly, the cost of providing services for co-working space still accounts for only a small percentage of total revenue and many predict this is where the real growth potential may lie for players in the co-working space. Time will tell whether this is the case or not, but one thing we can be sure of is that co-working is here to stay – and if there’s not a space near you right now, there will be soon.
Declan Flynn is Managing Director of Belfast-based commercial property agency Lisney, which works on behalf of many of Northern Ireland’s most significant investors and developers as well as major retailers and businesses.