Table of Contents
Overview
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- Key issues covered in this report
- COVID-19: Market context
- Economic and other assumptions
- Covered in this Report
Executive Summary
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- Impact of COVID-19 on serviced offices
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- Figure 1: Short, medium and long term impact of COVID-19 on serviced offices, 15 October 2020
- The market
- UK serviced offices market enjoys strong growth prior to COVID-19
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- Figure 2: UK market for serviced offices, 2015-20
- Increased adoption of hub-and-spoke model set to drive regional expansion of operators
- Start-ups look for flexible ways of working
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- Figure 3: Number of newly incorporated companies in the UK, 2014-20
- Market conditions to remain challenging in short term but strong growth expected to resume post COVID-19
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- Figure 4: Forecast number of UK serviced offices, 2021-25
- Companies and brands
- IWG remains largest operator in the UK
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- Figure 5: UK serviced office providers, by number of locations, 2020
Issues and Insights
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- Many companies expected to switch from long leases to flexible serviced offices to help them cope with the financial impact of COVID-19
- More traditional property owners and landlords set to enter flexible workspace market
The Market – Key Takeaways
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- COVID-19 to continue to disrupt the market into 2021
- Serviced office sector set to benefit from a greater requirement for flexible work spaces post-COVID-19
- Demand pivots to more fringe and suburban locations
- Creating better collaboration environments and a focus on wellbeing will be more critical than ever post-COVID-19
Market Size
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- Introduction
- Regional demand for flexible workspaces set to rise, reflecting the trend towards a distributed office portfolio model
- Focus on service, multi-functionality and adaptability of space
- The customer
- Larger companies starting to use flex space
- The supplier
- Operators incorporate co-working spaces
- More landlords set to become a competitor – or partner – to flexible space operators
- UK serviced offices market enjoys strong growth prior to COVID-19
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- Figure 6: UK market for serviced offices, 2016-20
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- Figure 7: UK market for serviced offices, 2015-20
- Regional expansion of flexible workspace operators
- Desk prices hold up despite difficult market conditions in 2020
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- Figure 8: Average workstation rates in key UK cities, 2020
Market Forecast
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- Short, medium and long-term impact of COVID-19 on serviced offices sector
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- Figure 9: Short, medium and long term impact of COVID-19 on serviced offices, 15 October 2020
- Lockdown
- Re-emergence
- Recovery
- Market drivers and assumptions
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- Figure 10: Key drivers affecting Mintel’s market forecast, 2019-2024, (in % annual change and % rate) – (prepared on 13 October 2020)
- Market conditions to remain challenging in short term but strong growth expected to resume post COVID-19
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- Figure 11: Forecast number of UK serviced offices, 2021-25
- Figure 12: Forecast number of UK serviced offices, 2021-25
Market Trends
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- ‘Space as a service’ model
- Emergence of specialists and niche players
- Demand pivots to more fringe and suburban locations
Market Drivers
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- Overview
- Trend towards shorter and more flexible office lease structures boosted by COVID-19
- Rise in remote working
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- Figure 13: Percentage of people in employment who mainly work in their own home in the UK, 2015-19
- Self-employment levels expected to rise on the back of COVID-19 recession
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- Figure 14: Self-employed workers in the UK, 2011-19
- Start-ups look for flexible ways of working
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- Figure 15: Number of newly incorporated companies in the UK, Q1 2017-Q2 2020
- Figure 16: Number of newly incorporated companies in the UK, 2014-20, (000s)
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- Figure 17: Business start-ups in the UK, by sector, 2018
- Figure 18: Business start-ups in the UK, by region, 2014-18
- The rise in a dispersed workforce set to drive regional expansion of operators
- Providers must cater for a fully diverse workforce with multifunctional and adaptable spaces
- New lease accounting standard to boost demand for flexible workplaces
Companies and Brands – Key Takeaways
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- More landlords set to become a competitor – or partner – to flexible space operators post-COVID-19
- Serviced office providers look to regional expansion
- Operators that offer pure co-working model hardest hit by COVID-19
Industry Structure
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- Industry development
- IWG remains largest operator in the UK
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- Figure 19: Key players in UK serviced offices market, by number of locations, 2020
- Figure 20: UK serviced office providers, by number of locations, 2020
- Consolidation and acquisition activity
- Trend of traditional property owners and landlords entering flexible workspace market set to be accelerated by COVID-19 crisis
Competitive Strategies
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- IWG looks to suburban working boom
- BizSpace looks to partner with larger firms to help them transfer to a multi-site model
- NewFlex launches new “hybrid office” model as more companies look towards a decentralised office portfolio
- Bruntwood Works focuses on creating “offices for the future” and strong customer communication
- Citibase launches Citibase Local initiative as part of COVID-19 response
- The Argyll Club launches flexible day office option
Company Profiles
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- BizSpace
- Company strategy
- Financial performance
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- Figure 21: Financial analysis of BizSpace, 2014-18
- Bruntwood
- Bruntwood Works launches £50 billion refurbishment scheme to created “offices for the future”
- Company strategy
- Financial performance
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- Figure 22: Financial analysis of Bruntwood, 2015-19 (£ million)
- Citibase
- Corporate restructure
- Acquisition by Newable in November 2018
- Company strategy
- New Citibase Local initiative launched as part of COVID-19 response
- Financial performance
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- Figure 23: Financial analysis of CBLH, 2015-19
- Landmark Space
- Company strategy
- Financial performance
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- Figure 24: Financial analysis of Landmark Space, 2014-18
- The Argyll Club (formerly London Executive Offices)
- LEO revamps and rebrands business following sale to private investor in 2018
- Company strategy
- COVID-19 response: The Argyll Club launches flexible day office option
- Financial performance
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- Figure 25: Financial analysis of London Executive Offices, 2014-18
- IWG/Regus
- Acquisitional activity
- IWG opts for franchising strategy to accelerate growth and build scale across the country
- IWG plans to open 3,000 sites across the UK
- Financial performance
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- Figure 26: Financial analysis of IWG plc, 2015-19
- Figure 27: Geographic turnover analysis of IWG plc, 2018-19
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Methodology
Further Sources and Contacts
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- Trade associations
- Flexible Space Association (formerly Business Centre Association)
- Trade magazines
- Commercial Property Monthly
- Estates Gazette
- Property Week
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