Flexible Workspace Sector to Play Key Role in Post Pandemic Recovery

  • Sector remains resilient despite slowdown in take-up activity
  • Post-COVID recovery could lead to increased demand for non-core city locations
  • Cushman & Wakefield predicts significant growth in managed workspace

The UK flexible workspace sector is facing its biggest challenge in COVID-19 but could play a key role in the recovery, according to Cushman & Wakefield’s new report Coworking 2020: What’s Next on the Flexible Workspace Horizon?

The report reveals that flexible workspace could offer the answer for many UK occupiers facing an uncertain future by providing a multi-faceted, flexible solution to their safe return to the office in the short-medium term. It also predicts that demand for non-core city locations could increase as occupiers seek alternative locations in commuter towns or city suburbs.

Unsurprisingly, the COVID-19 pandemic has impacted both the number and volume of leasing transactions which are being signed by flexible workspace operators as they focus on the profitability of their existing portfolio and delay decisions relating to future growth.

Cushman & Wakefield also predicts significant growth in managed workspace which is more akin to taking a traditional lease but on flexible terms and offers a fully fitted space. Given the ease and autonomy for the occupier, coupled with low upfront capital, the report highlights this type of product as a key growth area in a post COVID-19 world.

Christopher Dunn, from Cushman & Wakefield’s UK Research & Insight team, said: We see Managed Offices as an area of the market that will continue to grow in the medium to long-term, as occupiers are attracted by the opportunity to outsource their office requirements to specialist operators whilst spreading the cost of their office fit-out. New entrants to the market will range from “pure” managed solutions to landlord operators who want to add flexibility to their offering whilst maintaining some alignment with traditional leases.”

Central London

Flexible workspace accounted for 19% of take-up in Central London between January 2019 and June 2020. Take-up levels for H1 2020 reached just over 260,000 sq ft, compared to 1.2m sq ft the previous year, which was a record year for the sector.

This lack of take-up, combined with the delivery of newly built or comprehensively refurbished space, has led to an increase in supply levels across Central London, with 14.3 million sq ft available at the end of Q2 2020, equating to a vacancy rate of 5.12%.

At the end of H1 2020, flexible workspace accounted for 5.80% of total Central London office stock. Cushman & Wakefield forecasts that this could reach 6.13% by the end of 2020, depending on the opening of new centres where the building is still under construction or undergoing refurbishment.

Figure 1: Central London Take-up by Flexible Workspace Operators

Source: Cushman & Wakefield

Regional Outlook

The regional UK office markets saw continued growth from H1 2019 up until the first quarter of 2020 when the pandemic started to impact the UK real estate market.

In 2019, nearly 530,000 sq ft was acquired by flexible workspace operators, with Manchester and Birmingham cementing their status as the two most established markets outside London.

So far in 2020, activity has been significantly impacted by the ongoing pandemic, and take-up from flexible workspace operators has reached just under 30,000 sq ft, accounting for 4.2% of total take-up across the “Big Eight” regional cities.

The Future of Flex

The report also looks at how previous recessions have acted as a catalyst for growth in the flexible workspace sector and predicts that the current pandemic will drive further growth due to occupiers needs for increased flexibility, reduced capital investment and an enhanced customer experience.

Cushman & Wakefield’s recent Future of Workplace report predicts an increase in the number of landlords entering the sector and delivering their product, following the lead of the likes of British Land, Landsec, The Crown Estate and Bruntwood. It also anticipates a greater spectrum of products to be delivered under the flexible workspace umbrella, such as Managed and Cat A+ space.

Emma Swinnerton, EMEA Head of Flexible Leasing Solutions at Cushman & Wakefield, said: “Whilst we believe the long-term fundamentals of the flexible workspace sector are strong, COVID-19 is accelerating changes that we have been seeing in the last 12-18 months. In particular, we anticipate a move away from traditional lease arrangements between landlord’s and operators with these being replaced by partnership and/or self-delivery models more akin to the hospitality sector. As flexible workspace providers recover from a tough few months, we believe greater adoption of this risk sharing model together with increased occupier demand will continue to drive growth in the medium-long term.”


Seetle Dool Cushman & Wakefield


Novotel Gateshead Quays CGI
Accor Chooses Gateshead for New Dual Branded Hotel

Accor, the leading hospitality group, is bringing its internationally renowned Novotel and ibis brands to the £260m NewcastleGateshead Quays regeneration scheme.


UK Student Accommodation report
24,800 New Student Beds Enter UK Market

New research from Cushman & Wakefield reveals the purpose-built student accommodation (PBSA) market has been remarkably resilient over the last year despite the shadow of Covid-19, as the number of new beds increases and the development pipeline remains strong.


Priya Kharbanda
Surveyors To Host Virtual Charity Quiz

RICS Matrics is hosting its first ever UK-wide virtual quiz night to raise funds for Glasgow Children’s Hospital Charity and Great Ormond Street Hospital in London.



Flexible Workspace
Insights • Coworking

Valuation of Flexible Workspace

With flexible workspace now considered a vital component of the workplace ecosystem, how should landlords successfully value a flexible workspace proposition?
dark haired woman sitting on desk talking to coworkers
Insights • Office

Coworking UK Report

Our latest report “Coworking 2020: What’s Next on the Flexible Workspace Horizon?” explores how the UK Flexible Workspace sector could help play a key role in the recovery after COVID-19.

flexible workspace people working in converted warehouse
Insights • Coworking

Flexible Workspace's Biggest Challenge

Although some flexible workspace operators had not until now weathered a downturn what we learnt from the GFC in 2008 was that demand for flexible workspace in times of uncertainty tends to remain high.
Emma Swinnerton • 07/04/2020