People (And Dogs) Matter More Than Pricing To These Coworking Users

Obviously the flexible office market is big. In Manchester flex space has grown by 350% in five years (faster even than London’s 210%) and Birmingham is adding as much as 100K SF a year. WeWork’s third Brummie base at Six Brindleyplace was announced this week.

But why? What is the appeal of the new flex space and does it bear any relationship to the issues of tenure and pricing which seem to dominate property market mind-sets?

To find out, Bisnow spoke to companies big and small that have chosen to make the new breed of coworking and flexible office space their home, from within the property industry and beyond. The answer seems to be both simpler, and more complicated, and proves that the property business is now definitely a people business. And a dog business, too.

JLL reckons that more than 10M SF of new flexible floorspace will be added in the UK's capital and Big Six cities in the next five years, and flex space will account for over 8.5% of the total office stock by 2023.

The latest research from JLL, Disruption or distraction, where next for the UK flex market sector? suggests that the real revolution of flexible office space lies in the variety of solutions now on offer and that the market has seen more changes over the last three years than the previous 30 combined as it continues to grow and evolve.

JLL’s research predicted that over the next five years, more than 10M SF will be added to the stock in the key UK cities.

Whilst the regional UK cities remain some way behind London in terms of the impact of the flex sector, the Big 6 cities (Birmingham, Bristol, Edinburgh, Glasgow, Leeds, Manchester) have seen strong activity over recent years from operators. Take-up rose 26% between 2017 and 2018 to reach 584K SF, representing 10% of overall transactions. JLL highlighted that the pattern of the take-up in the Big 6 is following a similar trajectory to Central London but lags around three years behind. All are expected to see continued growth and it is anticipated that by 2023 flex space will account for an average of 5% of stock.

It is easy to fall into the trap of thinking there is something inevitable about this surge of growth. That, somehow, it is already understood because it is all about flexible tenure and manageable costs, and that property market basics control the flex sector just as they control everything else.

Well here’s the news: That’s wrong.

Justine McGuinn runs a Manchester PR consultancy whose clients include Rochdale, Oldham and Bury councils, surveyors Ryden, architects, civil engineers and building surveyors. She has been installed at WeWork’s No 1 Spinningfield base since December 2017 and is now well beyond her initial contract period.

“I got six months rent free on a one-year contract, which means a dedicated desk in a shared office with 40 desks,” McGuinn said. She was one of WeWork’s first Manchester members and her reasons for moving there (and staying there) are revealing.

“Well, the concept of WeWork was interesting, and I had to move because I was squashed into my old office space and the client who rented me the space was moving himself. So I went to have a look and actually what swung it was the dog. Because I have a dog, and at the old office there was no way I could ever bring the dog to work. So my issues were cost and location and the dog issue.”

Bruce the Shih Tzu is a regular and happy visitor to No 1 Spinningfield.

“The big positive surprise of moving to No 1 was the sense of community. It was a real positive. I’d got quite bored of my own company working at home. The big negative was everyone is really so young, so I felt my age a little, but also felt invigorated. It’s lovely to mix with people with different outlooks,” McGuinn said.

McGuinn plans to stay put at No 1 despite seeing a fast-moving stream of co-workers move in and out, as new WeWork deals attract them to other hubs.

Claire Rigby, who runs branding business Boardroom Consulting from the Colony flex spaces in Manchester, agreed.

“It’s not always the rational benefits of a property decision, like the price, that matter but the intangible benefits that are maybe more important,” Rigby said.

For her, mixing with the right people is just such an intangible benefit.

“I wanted a location that could be productive, close to clients and with people like me who are in work mode, because I like being in work mode.

“I know for some coworkers it is all about community and networking, and the links they form in coworking is a real driver for their business. At the other end of the spectrum it's about a buzzy modern environment where things are going on and even if you’re not formally connecting with them, it's good, and that’s how it works for me.”

Rigby said she is surprised how much more productive she can be with the right people around her. As the business grows, which it is about to do, she plans to stay in coworking space. “Maybe an office, not a dedicated desk, but yes, we’ll stay,” she said.

Move to the other, far grander, end of the corporate spectrum and you hear similar testimony about the importance of people and relationships, whether human or canine. Take the examples of Evans Randall Investors, who have a 1.8M SF office portfolio worth £1.2B. The list of assets they have bought and sold includes the Gherkin skyscraper in London and a host of other prize assets.

Executive Chairman John Slade admits he wasn’t keen on moving to flexible workspace: a former chief executive of BNP Paribas Real Estate he was used to more conservative office environments. But his experience at a London midtown coworking venue changed all that.

“The lease was running out on our existing building, and the chief executive wanted to give flexible space a try, I was less than enthusiastic, worrying about privacy and quiet and confidentiality, but after six months I would do it again,” Slade said. “The issues were all about me — I wasn’t used to sharing an open space — but my other concerns weren’t really issues.

“The big surprise was that I could live with it, and the flexibility and speed of occupation was a real positive. The downside is your business gets a bit lost in the WeWork image. Maybe that’s not so important for some businesses, but for people like us meeting our partners and investors, it is an issue.”

Slade, ever the property investor, remarks that WeWork and other providers will have to spend heavily to maintain the high-gloss, appealing environment of their hubs, but otherwise he is delighted. The flex experience left him with a warm human glow.

Focus Logistics works on some of the biggest construction projects in the UK, including City skyscrapers like One Blackfriars and Manchester mega schemes like Kampus.

Chief executive James Copperwait has worked in London and Manchester coworking hubs, as have his project teams. He loves it.

“We use a WeWork hub at Moorgate, between two and four desks at a time, and we’ve been there for a few years now. We also use hubs in Manchester and Paddington,” Copperwait said.

“We’ve got project teams on 12-36 months assignments, so it suits us well. We like the meeting spaces, and we like the vibe because we tried other providers in Manchester, renting for nine months with other flex operators, and it was very old school. Soulless.”

What swung it for Focus Logistics was the people.

“It’s a vibrant demographic. More collaborative. More pleasant, really. And what I mean by that is the coffee shop culture, grab a space and off you go, and you are not stuck in some soulless uninspiring room. It’s the buzz, the people. There’s always something going on. It’s stimulating.”

Copperwait expects to stay in flex floorspace. His only regret is that the beer taps aren’t turned on till 4pm.

You can multiply these kinds of stories almost indefinitely, and the closer coworking gets to unfancy everyday life, the more important people become in the logic of coworking.

Laura Leo became the owner of Leo’s Theatrical Costumiers four years ago and she has been a BizSpace customer at the Planetary House Business Park in Willenhall, near Birmingham, for eight months.

“There are three employees working with me and we love feeling like we’re part of a wider community," she said. "We felt really isolated in the building we were renting before we moved to the BizSpace centre and we didn’t really run into anyone else. The centre manager and the staff at this site really welcome you and they offer support when you need it the most. It’s great to engage with other small businesses too; we always run into people in the communal areas and stop for a chat — it feels like a family.”

Location, location, location is the traditional property market mantra, and it obviously still has a serious value for those with money to spend. But for the users of coworking and flexible office space something much more basic kicks in. The new motto for the UK office market ought to be: people, people, people.