267% Increase In Demand For Suburban Flexible Offices Puts Data Behind Theory

At the height of the coronavirus outbreak this spring, when lockdown was at its tightest, average footfall in the UK’s flexible office spaces fell to just 18% of 2019 levels. But a new report shows that in spite of this, companies were still paying for their space, and the number of companies that have actually broken contracts or moved out is relatively low. 

Overall contracted occupancy in UK flexible office spaces fell from 78% in April to 67% in August, according to Instant Group’s UK Flex Market Review, the most in-depth report so far on how flexible offices have fared during the pandemic. 

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Instant found that 16% of flex office clients served notice to exit their contracts in the second quarter of this year — clearly not an ideal situation, but not the large-scale exodus that might have been expected in a market where leases can be broken at very short notice. 

Demand for flexible office space has dropped sharply, with companies sitting tight while they work out their future space needs. Falls in demand ranged from a 23% drop in Leeds in Q2 and Q3 2020 compared to the same period in 2019 to a 59% drop in Glasgow. London demand dropped 36%.

The price users will pay for a desk fell by an average of 5%, but within this average there was a broad spectrum. Desk rates actually rose in Brighton by 13%, Bristol by 12%, Leeds by 10% and London and Manchester by 9%. But they fell by 26% in Edinburgh, 17% in Glasgow and 9% in Birmingham. 

Instant said facilities of 30K SF or larger have weathered the storm better than smaller spaces, because of the ability to de-densify and have people work in a socially distanced fashion. 

Instant’s report also provided some of the first hard data that might suggest a shift to the suburbs for office workers is underway. 

Both demand and occupancy of city centre sites fell by 28% in the first three quarters of 2020 compared to the same period in 2019.

But demand for sites on the outskirts of cities has risen by 267% in the same period, and actual occupancy has risen by 12%. Instant said Bishop’s Stortford, Walton-on-Thames, Almondsbury and Rickmansworth have all seen demand growth of well over 100% in Q2-Q3 2020 compared to 2019.