(Newswire.net — October 25, 2016) — Serviced offices, sometimes known as shared or executive offices in the U.S., are springing up all over the capital. A recent government report found that the number of serviced offices in London nearly quintupled between 2003 and 2012, prompting them to further investigate the impact they have had on the city. But with well over 1,600 firms basing their operations in serviced offices, what affect is this having on London real estate?
Why are serviced offices so successful?
This year the government launched its Startup Britain campaign. Over 500,000 new businesses were founded, many of them by aspirational millennials. Signing a long term contract for a huge office is not the safest thing to do for a new company with limited funds and no guarantee of success. This leaves the UK’s new businesses two options: work from home, or work in a serviced office.
Some sole traders may have no problem with working from the living room, or cruising coffee shops for free wifi. However, research shows that millennial-fronted startups have larger staffs than ever before, which means that serviced offices are a better way to get everyone together.
Serviced offices can also be substantially cheaper than traditional ones. Not least because they do not require occupants to pay business rates, which can be crippling for new businesses. Business rates firm Gerald Eve recently began working with serviced office giant Regus to ensure users of their offices will not be charged business rates. Taking all this into consideration, it’s no wonder the above government report found that 70% of serviced office occupiers are SMEs.
What difference has this made to the city’s real estate?
Since traditional tech industry areas like Old Street in London are already dominated by conventional office spaces, up-and-coming areas of the city, such as the redeveloped King’s Cross, are hotbeds for serviced offices. Shoreditch rent prices are driving many startups to the area, and developers are taking the industry’s preference for serviced offices on board in their plans.
Though one major development in the area is the new Google office, scheduled to open in 2017, several serviced offices are also being built to attract SMEs. With developments like these, it is clear that serviced offices are already influencing London’s real estate. As Brexit potentially causes a rise in empty office spaces, there may be even more room for serviced offices to expand, offering affordable workspaces for the the city’s growing number of self-employed entrepreneurs.