London’s working tribes are on the move – and as the pandemic’s fallout continues it’s to cool, flexible office spaces instead of the corporate headquarters leased for 25 years that used to be the bedrock of the capital’s commercial property world.
Even Britain’s biggest companies are embracing flexible space inside and outside London’s well-established office markets of the City of London and the West End, as new destinations open up at the likes of Kings Cross now and Battersea Power Station and Canada Water in the future.
Covid has changed the way London works for ever: office tenants were left cursing their long leases as they paid millions for empty offices sitting empty while their teams worked from home.
They have vowed to re-think their office space and at Instant we have explored where the capital’s business tribes are moving to as they re-think how they work, seek to win the war for talent and battle to get their teams back into the office.
We have ranked 10 locations according to which sector is the most active in leasing flexible office space over the last two years – and some of the results will surprise you, showing that some tribes are moving on to territory traditionally not their’s.
In Soho – synonymous with long ad land lunches and creativity – the suits of the financial services world have been most active in leasing flexible offices, followed by consulting and the consumer goods and services industries.
This is a key signal of the war for talent – if you are trying to attract the best staff, what’s not to like about a cool office space with great amenities in London’s night life heartland?
Next up is Camden, which until now has barely figured as an office location at all, but which is now seeing increasing flexible office leasing by software and computing services companies, industrial businesses and sole traders.
The sole traders are no surprise as new business start-ups rocket, but we believe software and computing groups like Camden because it can be an easy walk, bus or tube ride from where many of their teams live.
In Southwark, central government and the civil service have taken most flexible space, followed by consulting and media and entertainment.
While Westminster has traditionally been the home of government, lockdown has seen civil service offices empty out and the public sector is also falling back on flexible offices in less pricey locations rather than signing new, long leases on their traditional home turf.
At the same time, Westminster has seen an influx of financial services, consulting and media & entertainment groups, no doubt attracted by Victoria and Paddington’s excellent transport links to appeal to people who had become accustomed to working from home in the home counties.
Whitechapel & Aldgate has been lifted by the arrival of the Elizabeth Line, and financial services, recruitment and consulting organisations top the flexible offices activity league here as companies look for better value for money just outside or on the fringe of the Square Mile.
There are no surprises in the City of London, where financial services, recruitment and IT Consulting are the biggest new users of flexible offices. And in Shoreditch is maintaining its reputation for technology, which is the second busiest tribe after consumer & goods and ahead of recruitment.
Fast-rising Brixton is becoming a media & entertainment hub as these businesses seek the most new flexible space, and at Kings Cross technology including gaming, software and hardware are the busiest new users of flexible space; In Islington software and computing services reigns.
The rush of London’s tribes to new, flexible space is being reflected by a rush by property owners to convert the offices they own to this type of office, with 74% of flexible space operators telling us they are planning to expand.
Traditional landlords, too, are looking to grow their flexible space, with big guns like British Land, LandSec and GPE all creating their own offer and 29% overall telling us that they see this type of space as a good source of extra revenue.
New research by Instant and the Urban Land Institute shows that only 14% of property occupiers believe their office space matches their business objectives, which explains why we have also found that over two thirds of flexible offices are 80% full.
The new London tribes to watch are education and life sciences which having been niche groups have grown since the end of lockdown. And they are no longer wedded to traditional lab space. They are after the best space, in the most interesting locations, to attract the best recruits.
My bet is that we will start to see conventional office space in places like the City of London start flipping into flexible offices as a very new type of office occupier takes up space in the heartlands of the financial services and legal worlds.
Tim Rodber is chief executive officer (global) of Instant Group
