Following WeWork’s announcement that it is opening a co-working space, and Property Week’s recent piece on firms offering bespoke, adaptable space for young companies with changing space requirements (27.05.16), I wanted to comment on London’s position as a leader in this market.
To put this in context, it’s worth considering the traditional nature of London’s commercial property market and the factors that made it ripe for disruption, particularly given the new breed of tenant that has emerged in recent years.
The growth that we have seen among start-ups and scale-ups has fuelled a change in attitudes towards commercial property. These businesses have very specific property needs.
Growth expectations are high, and founders often cannot predict whether their businesses will employ five people or 200 people over the course of a year. This is at odds with the traditional approach of five- to 10-year lease terms with very stringent parameters requiring tenants to incur large capital expenditure costs on fit-out, furniture, fixtures and equipment, and onerous dilapidation negotiations.
As such, flexibility has become paramount. The onus is now on space providers to provide shorter, more flexible lease terms and spaces that are already kitted out to the appropriate level.
Of course, serviced offices with short-term leases are nothing new, and neither are co-working spaces. After the financial crisis flooded the market with young, qualified yet career-challenged professionals, many decided to go it alone, and co-working spaces quickly popped up in disused warehouses on the edges of the City to cater for such workers.
Yet it is only in recent years that the shared workspace market has evolved into something much more polished, propelled largely by London’s booming digital economy.
This newer breed of tenant wants space that matches their brand, and with employee satisfaction being a key driver, workspaces have had to move with the times in order to continue attracting talent.
For years, truly modern workspaces were the sole domain of Silicon Valley, but an increasing number of developments in London - such as Google’s King’s Cross development and Derwent London’s White Collar Factory - are becoming more sensitive to modern tenants’ requirements. These spaces understand the importance of a working environment that is conducive to creativity, productivity and comfort.
Of course, there are great things happening across the UK, and to suggest that this trend is purely a London phenomenon risks downplaying some of the great spaces that are popping up across the UK. But it should come as no surprise that it’s our capital city that is making waves. We were reminded recently of London’s global standing when it was reported to have overtaken New York and Shanghai in EY’s global ranking of top tech cities.
The capital is apparently now the second most likely city in the world to create the next big tech giant, behind San Francisco. Perhaps, in five years’ time, as our workplace industry continues to innovate, we will hold the top spot, but for now, it’s clear to me that London’s shared workspace scene is the finest in the world.
Jonny Rosenblatt, managing director, Headspace Group