London’s businesses are continuing to turn to flexible office space as Q2 figures reveal an increase in those opting for shared work environments with the latest data giving a unique insight into the capital’s property trends.
Statistics by Flexioffices, published in its 2023 Q2 State of The Market Report, show the number of listings in core London markets are up as a whole by nearly 10% (9.86).
The growth is driven by finance companies which top the table both in terms of contract revenue and number of shared workspace deals.
Overall, eight out of 15 core London markets saw an increase in the flexible office sector this last quarter compared to Q1.
These are: the City of London, Mid Town, Euston & Kings Cross, West London Prime, Southwest London Prime, Southwest London, Southeast London and East London Prime.
Flexioffices Managing Director, Michael Dubicki, said: “We’re seeing positive growth both in terms of overall building listings’ numbers and quarter-on-quarter increases in desk rates achieved, whilst the rest of the property sector is seeing lead volumes generally subdued across the marketplace.”
After finance, the legal sector is the second largest profession buying into flexible workspace in terms of contract revenue and number of deals agreed, followed by recruitment companies.
The research – published in line with the launch of the office broker’s ‘Flex Appeal’ campaign that aims to help companies find flexible business solutions – shows property hotspots with notable spikes in desk rates since Q1.
Michael explains: “We are in unique position as a flexible working space intermediary to use real-time data to give invaluable insight. It means we can benchmark and position pricing, help clients make decisions on building layout to optimise capital expenditure and crucially, pinpoint the best locations to open new buildings, where industry sectors are active.”
Detailed 2023 trends for key London sub-regions
Euston & Kings Cross saw the highest growth in the capital with a rise in listings of 36%. East London Prime saw listings increase by nearly a third (32%) and creative hub Mid Town saw listings rise by 29%, whilst Southwest London saw an upturn of a quarter (25%).
The new data also shows six out of 15 markets are achieving desk rates higher than those recorded for the whole of 2022. These are West End, Mid Town, Southwest London, Southeast London Prime, Southeast London and East London Prime.
Michael continues: “It is good news for us and the flexi office landscape that some of London’s key areas are beating the whole revenue for 2022 in this second quarter.
“That combined with the fact that others are showing an increase quarter on quarter indicates the market is on a positive course for the remainder of 2023.”
The West End commands the highest desk rate at £903 and saw a nominal decline in listings, down 3% on the last quarter. Key sectors buying flexi space in terms of contract revenue are financial, retail and creative industries with media and technology emerging in terms of the number of deals.
Euston & King’s Cross is ranked the second most expensive at £814 per desk and has seen the highest growth since Q1, increasing by over a third (36%), with charity, media and marketing companies driving desk sales.
Southeast London Prime is the third highest in terms of desk revenue at circa £686 but the area is seeing negative growth (minus 9%). The top three businesses taking space here are accounting & payroll, communications and media.
West London Prime comes in fourth with an average desk cost of £541 but remained static in terms of growth with the top three sectors by contract revenue being energy, design, transportation & logistics.
The City of London commands prices of £540 per desk and has seen growth of 11% since Q1, driven unsurprisingly by insurance, recruitment and accounting companies.
Sixth place is taken by booming Mid Town at £491. The are also boasts an impressive increase in listings of 29%, with the top three sectors in terms of contract revenue being legal, marketing and communications. Accounting takes the third spot from comms in terms of the number of deals.
Southwest London Prime comes in seventh with desk space retailing at £465 following a 7% growth. Finance, legal and IT Services are the dominant sectors in terms of contract revenue. When it comes to the number of deals, property takes over the bronze from IT.
West London has desk space retailing at £400, giving it the eighth spot but saw static growth rates, with flexi space taken by creative, marketing and media companies.
The under £400 barrier is broken by North London coming in at nineth at £368, with a nominal drop in growth of just 4%. In terms of the business sectors when it comes to contract revenue, they are creative, legal and fashion. In terms of the number of deals, healthcare takes the pole position.
Tenth is Canary Wharf at £355 per desk, following a slight dip in growth in Q2 of 3%, with shipping, design and healthcare taking over most space in terms of contract revenue and design businesses emerging in third spot when it comes to the number of deals.
Southwest London ranked 11th at £346 per desk but is seeing exciting growth of over a quarter (25%) up on Q1. This is fuelled in terms of contract revenue by property, creative and communications businesses and by the number of deals from creative, design and communications.
Taking 12th place is East London Prime averaging £351 per desk and seeing an impressive increase in listings of nearly a third (32%). The growth is driven in terms of contract revenue by marketing, communications and media, with recruitment taking first place from marketing agencies when it comes to the number of deals.
Northwest London saw the cheapest desk rate of £208, with sales down by over a third (37%), the highest decrease in listings since Q1 in the capital. Construction, recruitment and finance companies dominate both in terms of revenue and number of deals.
East London saw no change in sales and ranked the second cheapest with a desk rate of £243, driven by recruitment, finance and cleaning companies.
Southeast London is the third cheapest for desk space at £266 and but is seeing a rise in listings of 19%, driven by cleaning, creative and healthcare in terms of contract revenue with retailing emerging in third place when it comes to the number of deals.
Lead-to-deal times are also falling, in nine out of 15 London markets, suggesting that transacting customers are becoming much more certain in their decision-making process.
Michael adds: “We expect the remainder of 2023 to continue showing growth in building numbers and desk rates, but at a pace closely linked with broader macroeconomic uncertainties. Once inflationary pressures start to ease and there is better outlook on future interest rate prospects, the significant pent-up demand mentioned above is likely to be released and we will experience a significant and sustained period of positive growth. We’ll look to Q1 2024 for this to start accelerating at pace and will look forward to it!”
The company leads the way in helping to negotiate the best deals for businesses to save money on local, national and international office spaces for their clients. Flexioffices.co.uk has thousands of serviced offices in every major UK city and a curated international offering.