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COVID-19 drives demand for serviced offices and virtual offices

A newly published report notes how COVID-19 has driven demand higher for serviced offices in the UK, along with virtual offices for people working from home.

The IBISWorld study was updated in mid-October to reflect the impact of the pandemic, and notes that the UK serviced offices market is “at your service” at a time of rising demand for flexible office space.

Looking at the past five years, the analyst found average industry growth of 17.4% driven in part by economic uncertainty.

The report estimates the UK serviced offices market size at 3,960 individual businesses, employing nearly 5,700 people nationwide.

It places the current market value at £3 billion, an indication of the value of serviced offices the length and breadth of the UK for the nation’s economy.

And with businesses big and small looking towards the post-pandemic phase, the study predicts that many will opt for the flexibility of serviced offices in the UK once again.

Looking ahead to 2025

Despite the significant damping effect of the pandemic on the UK economy, IBISWorld predict that the UK serviced offices market will continue to grow.

“The serviced offices industry is anticipated to continue expanding over the next five-year period as more companies opt for the flexibility and increasing suitability of serviced offices,” the report states.

It adds that after the global financial crisis, there was a period of uncertainty during which serviced offices were “a popular alternative to renting an entire office space on a permanent basis”.

This appeal applies to tenants large and small, including individuals and SMEs who want to work in a collaborative environment, and large firms looking to avoid taking on the risk of a long lease.

During the pandemic, in conventional commercial premises, “existing tenants have attempted to defer rental payments and seek to break leases early in order to preserve cashflow”.

Serviced offices provide more flexibility, allowing companies to manage their expenditure on premises more carefully and with greater granularity, rather than being locked into a high-cost contract over a long period of time.

The immediate future

The middle of the decade might still seem a long way away, but prospects are bright for 2021 with vaccinations underway, and the UK serviced offices market is showing positive signs too.

According to IBISWorld:

• Some companies are seeking additional premises to support social distancing.
• Others want more flexible short-term leases due to economic concerns.
• UK virtual offices may also benefit from the government’s request to work from home.

Together, these trends are driving demand higher across the spectrum of the sector, which includes not only serviced offices and virtual office services, but also UK meeting rooms for hire.

Revenues from providing serviced offices account for just over two fifths (41%) of the industry’s economic activity – an indication that hired meeting rooms, conference rooms and virtual office services for homeworkers all make a significant contribution too.

Serviced Office Company proudly provide serviced offices, virtual offices and meeting rooms in Manchester and London, and will continue to support our tenants into 2021 and beyond with contemporary, furnished office spaces and meeting rooms on flexible terms.