Table of Contents
Executive Summary
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- The market
- UK serviced offices market enjoys strong growth
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- Figure 1: UK market for serviced offices, 2014-19
- Regional expansion of flexible workspace operators
- Growth in start-ups, especially in tech sector, represents key driver for flexible workspace demand
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- Figure 2: Number of newly incorporated companies in the UK, 2013 - 19
- Number of serviced offices expected to rise by 30% between 2019 and 2024
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- Figure 3: Forecast number of UK serviced offices, 2020-24
- Companies and brands
- IWG remains largest player but is facing increased competition from new entrants
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- Figure 4: UK serviced office providers, by number of locations, 2019
- What we think
Issues and Insights
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- Growing number of landlords are looking to incorporate flexible workspaces into their portfolios
- The facts
- The implications
- Demand for serviced offices set to continue to be driven by trend towards more flexible and agile workspaces
- The facts
- The implications
The Market – What You Need to Know
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- Increased demand for flexibility drives growth in UK serviced offices market
- Growth in start-ups, especially in tech sector, represents key driver for flexible workspace demand
- Number of serviced offices expected to rise by 30% between 2019 and 2024
Market Size
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- Introduction
- The customer
- The supplier
- UK serviced offices market enjoys strong growth
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- Figure 5: UK market for serviced offices, 2015-19
- Figure 6: UK market for serviced offices, 2014-19
- Regional expansion of flexible workspace operators
- Increased competition to exert downward pressure on desk prices
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- Figure 7: Average workstation rates in key UK cities, by city, 2017
- Figure 8: Average workstation rates in key UK cities, by city, 2017
Market Forecast
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- Providers need to differentiate to stay ahead
- Number of serviced offices expected to rise by 30% between 2019 and 2024
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- Figure 9: Forecast number of UK serviced offices, 2020-24
- Figure 10: Forecast number of UK serviced offices, 2020-24
The Impact of the Economy
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- Annual GDP growth falls to six-year low in 2018
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- Figure 11: Annual GDP growth rate, 2014-18, (%)
- GDP growth expected to remain subdued in 2019 and 2020
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- Figure 12: Forecast GDP development, 2017-23
- Business confidence remains low
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- Figure 13: Business confidence index, Q1 2018-Q2 2019
Market Trends
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- Hybrid model accounts for nearly half of all flexible space in the UK
- Emergence of specialists and niche players
- ‘Space as a service’ model
- Globalisation of flexible workspace providers
- Promotion of collaborative and community-driven values
Market Drivers
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- Overview
- Trend towards shorter and more flexible office lease structures continues
- Remote working on the rise as flexible working practices and self-employment increase
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- Figure 14: Number of homeworkers in the UK, January to March, 2012-18
- Figure 15: Number of homeworkers in the UK, 2014-18
- Self-employment levels have surged in the last 10 years
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- Figure 16: Self-employed workers in the UK, 2010-18
- Growth in start-ups, especially in tech sector, represents key driver for flexible workspace demand
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- Figure 17: Number of newly incorporated companies in the UK, Q1 2016-Q1 2019
- Figure 18: Number of newly incorporated companies in the UK, 2013-19, (000s)
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- Figure 19: Business start-ups in the UK, by sector, 2015-16
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- Figure 20: Business start-ups in the UK, by region, 2013-17
- Millennials increasingly dictate flexible workspace design, but providers must cater for a fully diverse workforce
- New lease accounting standard expected to boost demand for flexible workplaces
- Brexit uncertainty provides positive impetus for flexible workspace demand in short term
- Prices continue to rise across the office rental sector
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- Figure 21: Price index for companies operating in the property rentals industry, Q1 2014-Q2 2018
- Figure 22: Price index for companies operating in the property rentals industry, Q1 2014-Q2 2019
Companies and Brands – What You Need to Know
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- Traditional serviced office providers diversify portfolios to incorporate more co-working and flexible workspaces
- Increasing number of providers now provide hybrid offices
- IWG opts for franchising strategy to accelerate growth
- WeWork increasingly targets larger companies to challenge traditional landlords
Industry Structure
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- Industry development
- Traditional serviced office providers diversify portfolios to incorporate more co-working and flexible workspaces
- Rise in hybrid offices
- IWG remains largest player but faces increased competition from new entrants
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- Figure 23: UK serviced office providers, by number of locations, 2019
- Figure 24: UK serviced office providers, by number of locations, 2019
- Consolidation and acquisition activity
- Growing number of traditional property owners and landlords are entering flexible workspace market
- Institutional investors start to see the opportunities offered by serviced offices
Competitive Strategies
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- Acquisition activity
- Newable acquires Citibase to build “one-stop shop” for SMEs
- IWG/Regus has built multi-brand portfolio through acquisitions
- IWG opts for franchising strategy to accelerate growth
- Diversification and differentiation
- WeWork increasingly targets larger companies to challenge traditional landlords
- Bruntwood focusses on key regional markets
- LEO focusses on high quality accommodation in prime central London locations
- Digital activity
- IWG invests in new apps and disruptive technology
- WeWork revamps its member app to better serve customer requirements
Company Profiles
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- Bizspace
- Company strategy
- Financial performance
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- Figure 25: Financial analysis of Bizspace, 2014-18
- Bruntwood
- Company strategy
- Financial performance
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- Figure 26: Financial analysis of Bruntwood Group, 2014-18
- Citibase
- Corporate restructure
- Acquisition by Newable in November 2018
- Company strategy
- Financial performance
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- Figure 27: Financial analysis of CBLH, 2015-19
- Landmark Space (formerly i2 Office)
- Company strategy
- Financial performance
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- Figure 28: Financial analysis of Landmark Space, 2013-17
- London Executive Offices
- Company strategy
- Financial performance
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- Figure 29: Financial analysis of London Executive Offices, 2014-18
- IWG/Regus
- Recent acquisitional activity
- IWG opts for franchising strategy to accelerate growth
- Financial performance
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- Figure 30: Financial analysis of IWG plc, 2014-18
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- Figure 31: Geographic turnover analysis of IWG plc, 2016-18
- WeWork
- WeWork increasingly targets larger companies to challenge traditional landlords
- UK property acquisitions
- WeWork’s take-up of London office space almost haves in 2018
- Financial performance
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- Figure 32: Financial analysis of WeWork, International, 2015-17
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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