2015 has been an interesting year for the Central London serviced office market, in which interest for flexible workspace has rocketed.
In case you missed it, we discussed last month the steady and consistent growth in the London serviced office market over the past decade, with approximately five million sq ft of serviced offices now in situ across Central London.
While The City continues to take up the lion’s share of the market, hot on its heels is the West End – one of the most intense areas of demand for SMEs and larger firms seeking flexible workspace.
The West End takes up approximately 1.4m sq ft (nearly 30%) of Central London’s serviced office portfolio. And given the consistent level of enquiries received by the LondonOffices team, it’s clear to us that London’s beating heart of entertainment offers so much more than shops and cinema.
West End market growing
Indeed, new research from Savills suggests that serviced offices are filling a steadily expanding slice of the West End office market.
Their research focuses on the amount of office space that is leased by serviced office providers, and it shows that since the recession took effect in 2008, there has been a steady and convincing rise in the number of West End serviced offices.
That figure peaked in 2014 at just over 337,000 sq ft, which was almost three times the annual average. As such, 2014’s record looks tough to beat. But, halfway through 2015, Savills’ research found that West End serviced office operators weren’t far behind 2014’s halfway mark, with take-up during H1 2015 hovering just below 124,000 sq ft.
While there is still some way to go, this is already above the long-term annual average. And, interestingly, there are suggestions that take-up from serviced office operators could begin to intensify in the second half of the year.
Why? Because of two little words with giant ramifications: General Election.
“Pent up” demand
According to findings from Bilfinger GVA, figures based on the wider commercial property market (not limited to serviced offices) show that the West End did indeed have a quieter-than-expected start to the year.
This, says GVA, is down to “pent up” demand – meaning that potential occupiers held back from agreeing lease terms on properties until after the General Election in May 2015. GVA suggests that with the Election now behind us, it may instigate increased activity and a frenzy of take-up in the latter part of the year.
Patrick O’Keeffe, Senior Director at Bilfinger GVA, described the election result and majority government as “unexpected yet welcome” for London’s office market, adding: “We would expect the nature of this result to now encourage businesses to commit to office space requirements.”
Positively, this could pave the way for more much-needed serviced office space in the West End over the coming months, which spells good news for SMEs and larger firms keen to secure quality, flexible office space in this sought-after area of London.
Yet the question remains: why are so many serviced office providers and business owners going west?
Savills analyst Ben Raywood says it’s partly down to an increase in start-up companies. Yet it’s not just startups looking for flexible workspace in the West End, as demand continues to come from companies of all shapes and sizes.
There are many different reasons for businesses to set up shop in the West End. Perhaps top of the list is the area’s timeless appeal, elegance and perpetual sophistication. To many business owners, the West End is the holy grail of London locations.
Movers and shakers in 2015
As such, an ongoing challenge is finding appropriate space for all enquiries, as the area has become renowned for its limited supply of serviced and managed office space.
However, serviced office providers are responding, and we can see from Savills’ research exactly which serviced office providers have been making the biggest moves on available space in the West End so far this year.
Big names including Regus, Avanta and The Office Group clearly have a solid presence in the area, along with many other prominent operators including Prospect Business Centres, i2 Offices and Clarendon Business Centres.
What’s fascinating about this long list of serviced offices is the sheer diversity on offer. Regus, for instance, is accustomed to working with large multi-national firms and maintains a corporate presence across all of its centres, while The Office Group has a predominantly design-led appeal that’s both quirky and elegant.
One particular business centre that’s got tongues wagging here at LondonOffices is an impressive new serviced office on Brick Street, in the heart of Mayfair (pictured, top). This exclusive development oozes style and feels more like a 5 star hotel than a serviced office. Take a closer look for yourself, here.
What’s clear to us is that businesses of all shapes and sizes are keen to create an established presence in London’s West End, and a serviced office is the easiest and most cost-effective way to do it. That’s why demand is soaring, and that’s why so many serviced office operators are stepping up to secure workspace in London’s most sought-after location.
If you want a piece of the action, speak to the team at LondonOffices for clear, impartial (and free!) advice to help you make your move. We work with the majority of serviced office operators and our team knows the West End office market inside out. We’re confident we’ll find a workspace solution that’s right up your street.