Something strange is going on in London’s office space market.
Following a period of near-record lows, the volume of vacant office space has been steadily growing over the past two years. Deloitte’s most recent London Office Crane Survey reveals that in the past year alone, the volume of vacant office space on the market grew 31% to 15.4 million square feet. New space development is in decline, too. What exactly is happening here?
Brexit continues to be the source of some of the unease; businesses are hesitant to commit to new space in London when Brexit’s impact on how they can attract talent and sell services across the EU remains unclear. But that isn’t the whole picture.
Deloitte’s report notes that one key factor in the growing vacancy of secondhand space is “the rise in the popularity and provision of co-working and flexible office space.” Businesses are owning or leasing less space than before, opting to rely in part on more flexible workspace providers instead. This reflects a broader change in how both workers and business owners see the traditional office arrangement.
The change in attitude, amplified by the increase in options for flexible workspace, follows longrunning predictions by business leaders that their workforces would soon become more mobile. At London Business School’s 2014 Global Leadership Summit, a majority of attendees predicted that more than half of their own full-time workforce would be working remotely, or otherwise not in a traditional office setup by 2020.
London Business School’s Director of Learning Solutions, Adam Kingl, suggested that “technology and some fundamental shifts in management thinking are behind this response. Leaders are learning how to enable their teams to flourish, and there is a recognition that the notion of a traditional 9-5, Monday-Friday, commute-to-the-office job is quickly eroding. There is, though, an equally strong case for bringing teams together on a regular basis to inspire and to share.”
One business that saw the trend a long time coming was Santa Cruz-based headphone maker Plantronics: they redesigned their entire headquarters around the idea of enabling staff to work remotely and convene at the office for more collaborative efforts. While their space fits just 70% of their workforce, employees are given the flexibility and resources to work where they want to.
“People change through different catalysts,” Senior VP of Human Resources at Plantronics, Patricia Wadors, told Fast Company. “We wanted to be more open to smarter working, anywhere anytime. [...] There’s an expectation that you can work anywhere and be highly productive and engaged.”
As employers and employees alike awaken to that reality—research by IBM indicates that employees who work remotely just one day per week are more engaged in their work and less stressed—we’ll continue to see businesses shift away from the 9-5 in-the-office mandate.
But that doesn’t mean the need for colleagues to come together in a physical space will disappear; while remote work can be both productive and collaborative, physical proximity can enable more spontaneous and dynamic collaboration.
The rise in flexible workspace enables companies to lower costs by operating with a reduced footprint for their office—or even no office at all—without sacrificing the benefits of in-person collaboration.
Terms like co-working and flexible office space conjure up visions of sitting alone at a desk surrounded by strangers, but the field has expanded much in recent years to suit to suit all types of working, including large collaborative meetings.
Companies like Breather are taking the space-related stress of businesses away. Breather create productive and accessible spaces that are available for any duration of time on commitment-free terms, so businesses that once found themselves locked into undesirable commitments for only slightly-more-desirable office spaces can now access renovated, tech-connected space on flexible terms.
Startups looking to both keep fixed costs low and keep contributors engaged would be wise to consider how they can benefit from the growing options for flexible workspace, across London and the world.