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BCA MarketWatch: Looming Referendum Knocks SME Confidence

BCA MarketWatch: Looming Referendum Knocks SME Confidence

BCA MarketWatch (StockSnap.io)Flexible workspace operators have a direct line to business trends. From startups and independents to SMEs and corporates, flexible workspace accommodates them all.

As such, business trends and movements often heavily influence the performance of our industry, which is particularly felt during times of economic turmoil and political decisions.

So it's no surprise that the BCA's latest MarketWatch report has been dominated by one particular event, which has the potential to shake UK economic stability to its core: the EU Referendum.

According to members of the BCA, who convened for the BCA Board Meeting in March 2016, talk of a possible 'Brexit' appears to be knocking SME confidence and generating a subsequent air of caution for workspace operators across the country.

How would a 'Brexit' impact regional business? What impact would it have upon current and future levels of investment? Would it dampen demand for flexible workspace, or would it lead to prosperity and expansion?

The reality remains to be seen. But in the meantime, this uncertainty is creating a noticeable air of caution for businesses everywhere and, as a direct result, the operators of their workspaces.

London market "peaked"

Reports suggest that the looming Referendum is rattling the London market, with subdued demand in some areas and a "palpable sense of nervousness in the market".

However, this is not solely driven by EU uncertainty.

Following a sustained period of steadily increasing rental values, expansions and new entrants in Central London, reports from BCA Member operators in London suggest that the market may have peaked.

This is amplified by accelerating competition. The BCA has been informed that The City - London's most competitive market - is set to gain 20-30 new flexible workspace locations throughout Q1 and Q2 2016. On top of this, parts of London have seen some larger clients move to traditional lease options as landlords continue to offer flexible terms.

Operators in The City and across Central London appear to be bracing for this new wave of competition, which will undoubtedly feature heavily in ensuing MarketWatch reports (watch this space).

Are open workspaces being squeezed out?

Those aren't the only concerns facing the flexible workspace community.

Earlier this month, the Open Workspace Providers Group held an open discussion hosted by New London Architecture. The event raised a number of issues that are stinting opportunities for operators of open workspace (incubators, coworking, artist and makerspaces), including that of permitted development rights (PDR).

We've already seen the effects of PDR on the flexible workspace sector in London, Bristol, Manchester and other UK cities, and the Group claims that such conversion developments remain a significant threat.

Indeed, there are concerns that excessive office-to-residential conversions could lead to 'dormitory cities', which have an excess of centrally-based residential accommodation that leaves little space for affordable workspace in the city centre. This effectively drives small businesses out to the city fringes (along with providers of workspace) and dilutes central innovation districts.

This effect is further amplified by soaring costs of centrally located commercial property.

Of course this is not just a 'London problem' - it is one that has the potential to impact every city, town and entrepreneurial hotspot in the UK. So what can be done to protect open workspaces?

The Open Workspace Providers Group is generating research to support a series of proposals for the new Mayor of London this summer. But again, this is not limited to London. What is


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