- The new demand for flexible office space is leading to a reduction in supply, as well as increased costs for these offices across London.
- In London, there’s just over 3 million square feet of available flexible office space to rent across 2,500 vacant offices.
- The cost to rent a permanent desk in London increased 3.4% quarter over quarter to £690 per month in 2022.
Rubberdesk’s June 2022 London Flexible Office Space Report has shown that the flexible office market is recovering in London.
While some businesses are requiring employees to return to the office, many other companies are transitioning toward the hybrid work model. This model allows employees to work from anywhere, but includes the office as a central gathering place.
This new demand is leading to a reduction in the supply of flexible offices, as well as increased costs for these offices across London. The cost to rent a permanent desk increased 3.4% quarter over quarter to £690 per month in 2022.
As pandemic restrictions subside, serviced office operators such as The Boutique Workspace, Situu, Storey, Workpad, The Office Group, Venture X as well as others have opened over 20 new spaces across London, with another 5 to come over the coming months.
Reduced inventory causes prices to increase in Central London
The 5.6% drop in vacant space is despite the new additions from a number of operators.
In London, there’s just over 3 million square feet of available flexible office space to rent across 2,500 vacant offices. Rubberdesk has seen increased demand for space in Central London — leading to a 1.1% increase in the median price to rent a desk in a private office (£750 per month).
Southwark has the best value at £704 per desk, while demand for space in Westminster has pushed rents up 7.9% to £830 per desk, per month.
Businesses are seeking amenities in the city
With the greatest density of flexible office space located in the greater London region, demand has been high amongst businesses seeking both high-quality spaces as well as amenities.
With many businesses looking for easy access to transportation for their staff, prices for offices near most tube stations are expensive. For example, offices within a 10-minute walk of Liverpool Street are £825 per desk, while offices near Barbican station can be found for rates below the city median at £647 per person.
Although a new supply of offices is on the horizon, prices are still not decreasing in East London
After hitting a low of £500 per desk in May 2021, the median price to rent a flexible office in East London has increased by 18.4%, bringing the median rate to $592 per person per month. The rise in rates comes as somewhat of a surprise with a net increase of 10.5% in vacant space in the quarter.
Whitechapel in particular offers good value, and although prices are up 13% from Q1, the median rate of £479 per person, per month (up 13% since Q1) is still well below pre-pandemic rates.
Canary Wharf also has high-quality space at the rate of £427 per person, despite a reduction in the available flexible office space there.
The price of flex spaces in West London has remained largely unchanged
Despite a reduction in the available office space, West London pricing didn’t change for another quarter. With a 12.3% decline in vacant space from Q1, there are now far fewer available options outside Hammersmith & Fulham, which represent half of all available spaces.
Although the median price remained unchanged at £450, prices in Hammersmith increased 11.5% to a median rate of £600 per desk, greatly skewing the combined rate for West London. This price increase was driven by a 32% decline in available stock as demand returned. Outside Hammersmith, businesses will find median rents as low as £275 per person per month.
New flex office space supply has actually kept the price down in South London
Despite a 9.2% quarter-over-quarter increase in vacant floor space, and an 18% increase since the start of the year, the median price remained flat at £300 per person in South London.
While rates are often linked to supply, there is limited vacancy in this area, which has led to greater price fluctuations. When it comes to price and availability, Wimbledon leads the way with spaces available for teams of 1 to 4 at £290 per desk, as well as larger offices for up to 60 people at £477 per desk.
Due to limited supply, 70% of the available spaces are for small teams of 1 to 10, with only a handful of options available for teams larger than 25 people. 65% of South London’s available flexible office inventory is located in Wandsworth and Wimbledon.
The limited supply in North London is impacting options
The price of flexible office space in North London has remained flat at £395 per desk, despite a 3.1% drop in available space quarter over quarter.
Tottenham and Finchley currently provide the best value for businesses in need of a small office and offer a median rate of £144 and £260 per person respectively. Closer to the city, rates in Finsbury Park and Wood Green are £425 and £395 per person respectively, and also present more options for larger offices for teams of up to 50 people.