Share on

Serviced Offices: The Current Situation & What’s Next? 23rd Nov 2017

What’s the situation in 2017?

The Emerging Markets Office Review by Instant Offices claimed that the serviced office sector grew by 21% over the last 12 months with the addition of 124 new business centres. The definitive participants list of emerging markets is still controversial, however we can definitely count Brazil, Russia, India, China, South Korea and Indonesia as countries that will account for the world’s total GDP growth by 2025. (BCA) Overall, the UK and US are the most mature countries within the serviced office market. Central London is the global leading city with over 1,100 serviced offices in the city. The other standout cities include Birmingham, where serviced offices accounted for 25% of total office space and Dublin, where the serviced office percentage rose to 7% from 1% in 2017 Q1. This could be an early sign of the growth that is yet to emerge in many European markets.

What has caused the number of serviced offices to grow?

One of the key factors, when looked specifically in London is the expansion of the Tech industry, mainly via small to medium sized enterprises and young start-ups. Due to their nature, these kind of businesses require flexibility and shorter term contracts which in most cases traditional office spaces do not offer. However, scale-ups and start-ups are not the only target businesses for serviced offices – An August 2017 report by Savills states that the flexibility of space and lease terms of serviced offices also started to attract larger organisations, which use this as an opportunity to integrate with the millennial generation and creative companies to expand their talent pool. Another reason is the choice of location. Many serviced offices are in central London locations, like Targetspace Serviced offices in Holborn, Aldgate and Liverpool Street. This provides a convenience for millennials (the generation that will form 50% of the global workforce by 2020) who generally prefer to live near the city centres and trendy suburban areas, unwilling to commute for too long.  

What’s next for serviced offices?

According to Savills and CBRE reports in the last quarter of 2017, the underlying fundamentals for serviced office demands will remain strong in London. 2019 marks the introduction of the New Lease Accounting Standard, which will require occupiers to review their portfolios and effects of their accounting measures. According to this, any lease of one year or more will be treated both as an asset and a liability, with an annual interest charge. However, the good news is that leases under 12 months and serviced office agreements will be excluded from this new regulation. This is another great advantage of choosing serviced offices over conventional office agreements, as you will be exempt from interest charge increases. At Targetspace, our high quality serviced offices in the City of London and Central London can be occupied for as short as 1 month to as long as needed. We offer bright, fully furnished serviced offices with 24-hour access and our friendly and professional on-site teams are here to help whenever you need. If you’d like to get more information on our available serviced offices, get in touch with us here.