As The Independent recently reported, the demand for flexible office rentals has soared to reach previously unseen levels. This trend is set to continue: JLL research predicts that 30% of offices will be rented on a flex basis by 2030. Organisations are increasingly moving away from the restrictions imposed by conventional office leaseholds in favour of options that afford them more freedom and flexibility.
A number of factors are at play here. The recent series of lockdowns has fundamentally altered the way we work, with hybrid working becoming a favourable option in the eyes of many. Flexible rentals are much better suited to the shifts in office usage that this style of working brings about, enabling organisations to react quickly when headcount changes.
Added to this, businesses are now faced with the uncertainty of potential coronavirus restrictions looming overhead. Flexi workspaces don’t tie you down to a lengthy contract and allow you to add or reduce office space as required, which is all the more attractive when you’re unsure of what’s coming around the corner.
Over the course of this post, we’ll explore these ideas more closely and unpick a range of other reasons why companies are choosing serviced and managed office space. Join us as we take a deep dive into the rising demand for flexible office rental.
For years prior to COVID-19, many businesses had been drawn to the appeal of serviced offices and the market was growing rapidly.
It’s easy to see the attraction: this type of office setup comes fully furnished and ready to move in, with state-of-the-art facilities and an on-site management team all included for a fixed monthly fee (see our guide to serviced offices to learn more).
But what is it about serviced offices and other forms of flexible rental that saw them revolutionise the office industry even before the pandemic hit?
Disregarding for a moment the impact of coronavirus, flexible office rental options have increased in popularity over the past decade because they empower companies to adapt to change.
It’s easy to respond to a period of unexpected growth by increasing the amount of office space included in the rental and upping the headcount at short notice. By the same token, overheads can be reduced by scaling down on space if cutbacks are required, something which often isn’t possible with a traditional seven-year leasehold.
Equally, an organisation may need to open a new regional office as part of a market entry trial or to tap into a new localised talent pool. Serviced offices represent the ideal solution for a business in these types of strategically challenging scenarios, providing a workspace that’s ready for use straight away with none of the costly commitments that come with a lease.
Another key attraction of flexible rental is that the finances are straightforward.
As Brian Andrews, divisional managing director at BizSpace, puts it: “Many businesses appreciate the all-inclusive approach to offices: a serviced office can be rented for a set monthly amount with no unexpected charges. This then covers you for everything from utilities and reception staff to cleaning and building repairs, leaving you in no doubt as to the effect on your cash flow.”
By contrast, taking on a long-term leasehold immediately introduces a lot of upfront costs. Before you can even move in, there’s the expense of hiring reception staff, purchasing the right tech, and fitting the space out with furnishings. Flexible offices revolutionised the office relocation process and disrupted the industry by taking care of all of this as part of the rental fee.
Flexible rental had already turned the office game on its head at the start of 2020, but the pandemic has brought about changes that have taken the demand to the next level. In the context of coronavirus restrictions and a hybrid workforce, the ability to rent offices on flexible terms looks more appealing than ever before.
COVID-19 has fundamentally – and perhaps irreversibly – altered the way we work.
Where previously a full office environment was the norm, companies will undoubtedly find their premises at reduced occupancy levels when moving towards a hybrid working model. To accommodate social distancing and the appetite for part-remote part-office work, it may be necessary to introduce a rota with limited staff numbers attending the office on any given day.
Organisations that are burdened with long-term leaseholds will find themselves paying for wasted office space when at 50% capacity. By contrast, those that rent their premises on a flexible basis will be able to adapt based on the proportion of staff that are actually coming into the office, decreasing and then increasing the space that they pay for as required.
As employees seek to split their time between home and the office, more established organisations are adopting the hub and spoke office model, with one ‘hub’ HQ and smaller ‘spoke’ offices in different locations. By swapping centralised workplaces for smaller regional satellite offices, companies reduce the commute for staff and make it easier to drop into a local office (an attractive proposition in a post-pandemic climate).
Brian Andrews believes that this is one of the main reasons why flexi offices have seen exponential growth: “more and more ‘traditional’ type leaseholders are becoming switched on to flexible offices not only for the financial flexing they allow, but also for the work-life balance and wellbeing benefits; the modern workforce is much happier working locally”.
Most businesses opt to use flexible office rentals for their regional premises. Setting up and running workplaces in different locations is no mean feat – ready-to-go serviced offices make the process easier as they already have the necessary facilities and are managed by the providers. With the hub and spoke model on the rise, we expect that flexi workspace rentals will only become more popular in the future.
It’s clear that flexible rentals enable companies to offer enticing benefits like nearby satellite offices and a hybrid working pattern. At the same time, the rising demand levels have also been influenced by more practical considerations related to the pandemic.
Since coronavirus restrictions began in March 2020, we’ve experienced a series of lockdown measures that have seen office buildings fall into disuse for extended periods of time. Businesses on flex terms have been able to remain agile, withdrawing from rentals at the end of their renewal periods and returning when possible; those that are tied into long-term leaseholds have had no option but to continue paying for empty office space.
Set against a backdrop of economic uncertainty, flexible office rentals also offer a strategic advantage in that they facilitate adaptation to growth or periods of poor performance. As we’ve discussed already, a business that needs to increase its office headcount or downsize can do so at relatively short notice when its renewable period comes up.
Above all, then, flexible offices have seen a surge in popularity due to the agility that they afford businesses. In an increasingly uncertain world, the ability to adapt your property portfolio based on flex rental terms is invaluable.
This guide has explored the rising demand for flexible office rentals, taking a close look at the reasons behind this trend prior to COVID-19 and also in light of the pandemic.
We recently launched serviced offices at BizSpace Theale in Reading, providing flexible rental terms on contemporary furnished office spaces with all of the amenities taken care of – enquire now using the button at the top of this page.