London, like no other city, is constantly changing and adapting to move with the needs of those who live and work here. And those of us in the property industry need to adapt and change as well. Anyone working in London will have noticed that the office options available have become much more diverse in recent years, moving away from traditional formats towards innovative spaces that meet the needs of occupiers wanting flexible and convenient solutions.
Once such flexible solution is coworking spaces. In the last few years, coworking has had a huge impact on office markets all over the world with London taking the top spot for coworking popularity.
According to Cushman & Wakefield’s European Coworking Hotspot Index, coworking space in London now totals more than 10.7 million square feet, which constitutes around 20% of leasing activity in Central London, a figure that is only expected to grow.
Coworking has proved popular with people and organisations across a variety of industries from so-called ‘digital nomads’ seeking flexible hot-desking solutions to large corporations using coworking to encourage staff to work in new and innovative ways. According to research by Knight Frank, economic uncertainty has been a key driver in the increasing number of companies seeking flexible office options as they relieve occupiers of the significant expenditure associated with setting up conventional offices such as fit-out, catering, IT services, meeting rooms etc. Working on short-term contracts also appeals to new businesses growing rapidly, allowing them to simply take more space in the building as they hire more staff rather than being locked into a lease for an office they outgrow.
WeWork, currently the biggest private occupier of commercial real estate in London, operates by taking out long-term leases on buildings and fills them with short-term tenants. The American company has been incredibly successful in attracting start-ups and millennial-led companies who not only want office space, but also networking and hang-out spaces, offering services such free-beer on Fridays and yoga classes for its occupiers.
Some smaller cowork spaces are even offering childcare, attracting working parents who want more flexibility than if they were to use traditional nurseries. One such example I’ve come across is Second Home, a popular co-work space in London and internationally, which has a crèche in its London Fields site.
Although popular, co-work spaces do of course have their issues. It’s widely known that WeWork often struggles to generate enough revenue, losing $1.9bn last year, and are starting to have difficulties convincing lenders to finance more WeWork buildings for fear of overexposing themselves.
While not every company wants to lease coworking spaces, it is becoming increasingly clear that developers and landlords need to adopt new technology to attract tenants. Gone are the days where location and price are the only factors that really matter.
The need for smart technology, such as windows that reduce the glare of bright sunlight and large video screens – not just in boardrooms – is becoming a must. Beyond just proving attractive to potential tenants, smart office technology also has the ability to increase the efficiency of the building itself and lessen its maintenance costs, so it’s a win-win. For example, an office could have internet-connected sensors that detect motion, and therefore occupancy, which can be used to trigger technology such as smart lighting. According to the research company Gartner smart lighting has the potential to reduce energy costs by 90% due to sensors being able to turn lights on and off according to motion detection or adjust the intensity. Intelligent climate control also allows offices to automatically regulate temperature, increasing the system’s efficiency and reducing carbon footprint.
It’s often said that technology moves fast, but so too do peoples’ expectations and I don’t think it will be long before smart office features become the norm. Providers will need to keep up to stay competitive.
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