Co-working and flexible office space provision is experiencing huge growth, in part due to the expansion of small businesses and start-ups who now demand flexibility in their workplace. In turn, flexible space providers, such as Regus or WeWork, are benefitting from this environment. However, larger businesses and start ups are now cashing in on this lucrative market as well.
According to the Federation of Small Businesses, SMEs accounted for 99.9% of all private sector businesses at the start of 2015. Between them, these small firms employ 60% of the private sector workforce, with a combined annual turnover of £1.8 trillion.
Increasingly, small firms are looking to serviced offices to meet their workspace needs. According to Deloitte, serviced offices have become a natural choice for first-time occupiers. Indeed, Deloitte also note that there is now a greater understanding and acceptance of co-working space, which is expected to become the first choice for many start ups.
On the back of this, serviced office and flexible space providers are doing well. Growth in every region of the UK (except the South East, which often loses out to London’s offer) is strong, and is expected to continue on the back of economic growth and an increasingly entrepreneurial culture.
However, larger companies are now seeing the benefit of sub-letting their excess space to small businesses and start-ups.
The principle is simple. As companies grow they take space to meet their future needs rather than their immediate demand. In the interim, they can sublet their excess space to small businesses and start-ups. This makes the excess space ‘pay’ but also creates a vibrant work environment, with more ideas and different perspectives. Increasingly, small businesses and start-ups are seeking out this environment, to network and collaborate with like-minded people and to open a dialogue with other small firms.
Funding Circle, a fintech company now worth over £1 billion, is following this model in its new headquarters in London. The company has recently moved into 71 Queen Victoria Street in Mansion House on a 10 year lease, outgrowing premises in Oxford Circus, Southwark and Blackfriars along the way.
In its new space, the Royal Bank of Canada Building, Funding Circle has taken two floors but only currently requires one. In response, the company is advertising 400 desks to small companies and freelancers on a co-working basis at a reduced rate.
In the meantime, Funding Circle will continue to grow and slowly take over the excess space. This gives them certainty of tenure but also offers them the opportunity to provide a helping hand to small businesses. This is something BCA members have been championing, giving small businesses the environment to succeed and grow.
According to property marketplace, Hubble, there is an increasing trend towards larger businesses sharing their space with smaller start-ups. Of the 500 workspaces Hubble currently host on their website, 29% are SMEs offering spare space, and 5% of these are worth over £100 million.
With the demand for flexible workspace increasing dramatically it doesn’t need to be established providers who exploit the opportunities it presents. As is becoming increasingly popular, large companies are taking advantage, to benefit their own business but also to give the support to small businesses that they themselves might have enjoyed once.