Latest Flex Office Market Insights: London Flexible Office Space Report - January 2024
Our market report provides insights and showcases pricing and availability for flexible office space across the UK.
Though the supply of available space dropped throughout 2022, inflation and economic uncertainty, has driven up the amount of vacant flexible office space by 33% over 2023, representing the largest single increase since the start of the pandemic. With tenants on much shorter term agreements than direct leases, these businesses were better able to react to new work-from-home circumstances and release office space where they no longer required it.
With a net 6.5 million sq. ft. of flexible space available during this time, UK businesses of all sizes have more options than ever to rent a flexible space that meets their needs.
Not surprisingly, the median cost to rent a desk in the UK fell from £700 to a low of £500 per person through June 2022, first due to the pandemic followed by a slowdown in the overall economy. However, inflation and economic uncertainty have put further pressure on prices, with rates dropping to £490 per person in the most recent quarter.
With the threat of any future lockdowns well behind us, the outlook for the Flex market is positive. As the name infers, it's the most flexible tool businesses have today to manage costs during these continued uncertain times. In our view, the demand for quality offices can be attributed to both greater affordability and businesses' need to be nimble in a changing market.
If you’re looking for flexible office space for 100 people or less, there are thousands of turnkey private offices right across the United Kingdom in every major city and many small towns across all regions.
A key starting point for many businesses is budget and the Rubberdesk research team has compared the major locations to look at the median monthly office rate per person. Using the Rubberdesk platform and examining real-time availability and pricing we are able to bring together the most thorough comparison possible. Here is where businesses can compare the entire market from Central London to South London, and Manchester to Cardiff to Glasgow.
At a macro level, the median price to rent a desk across the UK is £490.00 for a private office and £270.00 for a hot desk in a shared space.
|Median Office Rate Per Person
|Median Coworking Desk Rate
|Flex Floorspace Available (sqm)
|Available Desk Capacity
|Prices and availability effective December 31, 2023
While these prices and capacity give you a sense of the total market, it's important to break down each city to get a true sense of cost and availability in your region. As the chart below shows, Cambridge is the most expensive per person per month for private office space, though this is primarily due to its proximity to London over other market factors. In London, rates found in Central drive the overall pricing with rates over £900 per person in some sought-after locations. Outside London, you'll find rates in Glasgow, Bristol, and Cardiff at least half of those typically seen in London.
The rest of the report drills down into the detail of the office spaces available and provides the most comprehensive and up-to-date analysis of Flexible Office space anywhere. We’ve analysed 6.5 million sq. ft. of office space from over 6,500 offices for rent across the UK on Rubberdesk with real-time availability and pricing. And because Rubberdesk has thousands of hosts listing their office space for rent, it’s the best place to compare the market.
So, here’s what we’ve looked at:
For any type of office, whether in a converted warehouse or a premium office building, location often dictates the price. When we dive into the data, key suburbs in Central and West London are by far the most expensive areas in the UK to rent office space, with Manchester, Birmingham, and Glasgow in Scotland being far more economical. If budgets are tight as they are for many startups and may well be for many other companies as they return to the office post-pandemic there are plenty of locations on the fringes of London to save thousands per month.
Up until 2008, most commercial rental agreements were conducted on a fixed yearly basis for 5 to 10 years forcing companies to lock into long-term arrangements that may or may not fit the growth plans for the business. If a business grew or shrunk, it was at the mercy of breaking a contract or lease re-assignment. The past two years have shown how even the best-laid plans can go awry and in times of great uncertainty, short-term rental commitments are proving advantageous to businesses if not Landlords.
With the explosion of the startup ecosystem and the coinciding growth of coworking and serviced offices, flexible terms became popular for many small businesses that didn’t have the budget to commit to long-term leases. Today, businesses of any size, from one to a hundred-plus staff have the option to sign more flexible agreements for a year at a time. This means that now, for the first time, the duration of tenancy commitment can match the certainty each business has about its plans and fit its immediate need with room to grow, resize or even relocate as required. For those businesses facing too much uncertainty and risk, there are even month-to-month agreements available for both coworking operators and traditional businesses who have spare office space to rent.
If you’re a big fan of flexible office space and flexible payment options, then you’ll have a few choices to consider. If you’re not sure where you’ll be in 6 months or a year then a month-to-month contract is ideal, though you’ll pay a premium of anywhere from 10-20% for the privilege. If you don’t mind making a longer-term commitment a year or longer then you can often negotiate a better deal than the rates shown. In fact, right now we’re seeing deals offering 15-20% discounts when signing a 12-month agreement to entice companies back after the pandemic.
As a business, you have a plethora of options available from fully-managed office operators such as Servcorp to WeWork, Regus (owned by IWG), Mindspace, and UK owned Huckletree, Labs UK, and Bruntwood to name a few. From desks and chairs to printing and amenities such as showers and bike racks, these fully managed operators provide everything you need at a single monthly price with the option to add more desks or downsize the space as needed.
Commercial office space on the other hand generally requires a much longer commitment (often 3-5 years) and comes with extra costs such as furniture, electricity, IT, maintenance, and cleaning. In addition, a traditional lease often includes costs for space you never end up using such as the lobby.
It's fair to say that the comparison of Flexible Office Space to traditional Commercial Leases is like comparing apples and oranges. There are a number of differences between the two and each wins in its own regard. We'll save a comparison of the relative merits of each style for another time.
Though many coworking operators have rates specifically for a single desk in an open plan space available, these generally represent less than 10% of the available spaces. Private and customised offices make up the vast majority of Flex space rented. These private offices typically share communal facilities such as meeting rooms, bathrooms, and kitchen areas but are self-contained and fully serviced.
When looking at office size, the smaller private spaces of fewer than 10 desks account for 51% of all available space, down from 51% in Q1. This is somewhat in response to the demand for smaller private spaces by businesses that are looking for safe places for their employees to work away from HQ or home and with new physical distancing guidelines becoming the norm, we expect the operators to alter open plan coworking spaces into more private small offices.
Though larger offices for 50-plus people make up less than 9% of the available offices, there are a number of large offices on offer for teams of 50-400 which account for 40% of all available floor space. Depending on where demand sits moving forward, these larger offices of course could be carved into smaller spaces as required emphasizing the flexibility of modern office space in this sector.
Prior to the pandemic, flexible desks were a popular choice for many individuals looking for a place to work, though, they quickly lost favor as businesses and coworking operators reacted to the changing demand brought on by social distancing guidelines and the need for private spaces.
However, as Covid-19 restrictions ended, demand for different workspace types is once again evolving. in a recent survey on 2023 coworking trends, DESKMAG found that hot desks have once again become popular with a 9% increase while 1 person private offices have seen a 15% decline over the past 18 months. Not surprisingly, DESKMAG found that demand for team offices outweighed both flexible desks and individual offices as larger businesses that have been fully remote have started to test out hybrid workspaces. And as business sentiment continues to improve, we expect demand for larger offices to outstrip other types.
For traditional office leasing, rent is calculated based on the annualised price per square foot and multiplied by the size of the space to give a net annual rent. On top of the rent, there are also outgoings and land tax which must also be paid by the tenant. For a 1500 sq ft unit with a £75 net rent, the monthly rent for an office near Liverpool Street Station comes out to £9,375 per month (1500 x £75 / 12 + VAT), on top of which are outgoings for building management, electricity, Internet, etc, which are not always fixed.
By contrast, the flexible office space calculation is much simpler and typically based on the desk capacity of the office. If for example, each desk in a private office costs £625 per person, the cost for a 6-person office is simply £3,750 (£625 x 6 = £3,750 per month + VAT). Flexible office rental typically includes credits towards meeting rooms and printing facilities, but for heavy users of either, there are options to have these services included. Of course, in addition to the office space and desks comes access to common areas such as kitchens, meeting rooms, washrooms, and other amenities such as showers and even secure bike racks.
It’s important to note that traditional office rent does not cover the fit-out, desks, or any amenities you want to offer your staff. In addition, you may be paying for excess space that you don’t need. Whereas a flexible office space gives you the opportunity to only pay for what you need and numerous amenities that would otherwise not be economical or feasible in a small traditional office setting.
The cost of office space varies by location, amenities, proximity to transport, terms, and economic factors. So when looking at the cost of office space it’s important to look regionally to get a better sense of what you might be paying in your location.
When it comes to the UK market, higher prices across greater London skew the median national price. Therefore it's important to break out pricing for London comparing it to other regions across the UK. As shown in the chart below, prices in London range from a low of £589 for an 1-4 person office to £746 for a larger enterprise office for 50+ people. These prices are more than double the median price for most other locations with prices outside London ranging from £275 for teams of 5-10 people to £327 for teams of 26-50 staff.
Typically, the cost of office space for a smaller team is cheaper for teams under 25, though this will vary by city depending on the number of spaces available. The higher price range for a 50+ office is a reflection that it may encompass one or more entire floors with private meeting rooms, kitchens, and even amenities such as private elevator access.
The data presented throughout this document is based on the median prices available for 1-4, 5-10, 11-15, 16-25, 26-50 & 50+ private offices available in locations around the UK. While the prices for most large cities will encompass hundreds of options for each office size, smaller cities such as Edinburgh may have fewer options available depending on the number of operators and little or no options available for some of the larger office sizes.
With a vacancy rate of 13.3% prior to the pandemic, there are now considerable discounts on offer with operators slashing prices due to increased vacancy rates. In fact, we've already seen a softening in prices over the past half year with prices on 50+ offices down 10% from December 2022.
At a city level, Greater London accounts for over 70% of the flexible office space in the UK, with Manchester and Birmingham respectively the largest centers outside London. Leeds follows, with Sussex and Berkshire not far behind and growing fast.
When it comes to price, London is the most expensive per person per month for private office space, boosted by the amount and rates found in Central and West London.
|City of London
Prices and availability effective December 31, 2023
As a large global city, Greater London is as diverse as many of the regions around the UK with a range of office sizes, prices, and amenities to meet the needs of almost any business. Though there are bargains across the city, prices are at a premium in the City of London with median desk rates ranging from £650 for a 5-10 person office to £732 for an office of 50 or more staff.
Prices and availability effective December 31, 2023
Author: Tom Petryshen, VP Growth & Analytics
Updated: January 10, 2024
The median price to rent a desk in the UK is £270 per person per month as of December 31, 2023.
The median price to rent a private office in the UK is £490 per person per month.
As specialist brokers in the flexible office market, Rubberdesk is across all the options, offers and availability. We have real time pricing for thousands of spaces listed by hundreds of providers to help find your next office.
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