The volume of flexible office stock in Edinburgh and Glasgow is set to more than double over the next five years, according to new research from property consultancy JLL.
A new report from JLL – Disruption or Distraction – predicts that flex space will account for over 3.0% of the total office stock in Edinburgh and 4.0% in Glasgow by 2023.
The most recent sign of Scotland’s flex revolution has been the arrival of We Work in Edinburgh. The New York-based operator chose Edinburgh as its 3rd UK city in which to open a 46,000 sq ft space on George Street, accommodating up to 800 people.
Flex workspace providers currently occupy a modest 1.5% of Edinburgh’s total office stock, comprising 376,000 sq ft across the City Centre. The largest flex operator by some margin is Regus, who occupy six city centre locations. Recent take-up has been steady, with similar levels leased in both 2017 (38,000 sq ft) and 2018 (39,000 sq ft), following a blip in 2016.
Like Edinburgh, Glasgow’s flexible office market is in its early growth stages. JLL estimate that the sector occupies 1.6% of the city’s total built stock.
Flex workspace take-up reached a recent peak in 2018 with 73,000 sq ft transacted in three deals. The bulk of which saw Regus expand its presence to two further locations at 1 West Regent Street and 100 West George Street. Glasgow’s largest flexible workspace is operated by Clockwise, a regional provider offering both co-working and private offices, who opened a 36,500 sq ft space at Savoy Tower in 2015.
According to the new report from JLL, the growth of the flex sector is being driven by the evolving nature of work and the shifting structure of the economy, supported by rapidly advancing technology. Flex space tends to offer companies alternative solutions with no commitment required to either long-term leasing, to facility management or major up-front capital expenditure. These spaces are being used by individuals, SMEs and increasingly by larger corporates, who are attracted by the increased flexibility, access to innovation and potential reductions in real estate. Providing aspirational workplaces allows companies to enhance the human experience and create an environment where people want to work. This is an essential consideration wherever an office is located.
Commenting on the future prospects for flex operators in Edinburgh, Lead Director Regional Tenant Representation Ben Reed said:
“Edinburgh’s status as one of the UK’s fastest growing tech hubs is reflected in the diversity of the city’s flex workspace offerings. However, supply remains the key stumbling block to any rapid growth in flex stock. Flex operators are typically looking for space north of 30,000 sq ft, and there simply isn’t much of this size available at present.
“Flex has not yet truly disrupted the office market but is a response to the consumerisation of the workplace. Occupiers will play an increasing part in the future of direction of the sector, as operators (and increasingly landlords) become more aware of their customers’ needs and understand how they use spaces. They will benefit from a greater choice in real estate options than at any time previously.”
Commenting on the changing nature of the flex sector, JLL Director of Office Agency Mike Buchan said:
“Flexible office space is presenting the corporate occupier market with an appealing alternative. Rather than enter into long leases with landlords, flex operators are increasingly looking offer ‘managed workspaces’, where the space is tailored to the individual occupier’s requirements and all occupational costs are wrapped together with a rentalised fit-out.”
“Looking forward, we expect Glasgow’s flex workspace stock to continue to expand, supported by ongoing expansionary requirements, primarily from regional operators.”
For a full copy of the report, visit https://www.jll.co.uk/en/campaign/flex-space