The early months of lockdown gave the serviced offices sector a torrid time. However, two West Midlands observers predict a significant upturn from Q2 2021 onward.
This brighter future will become more apparent once companies and individuals have decided their new work models.
Richard Johnson, Managing Director of UBC (UK), runs eight business centres across England, from his Solihull Parkway head office on Birmingham Business Park. Richard says that the industry has yet to significantly recover, but gloomy headlines fail to tell the full story.
The reality for urban service offices
Richard said: “Across the sector, there was inevitably an immediate halt in current demand and reduced occupancy when the pandemic began. Predicted demand in all urban areas then fell sharply, typically by 30% – and sometimes more.”
“However, data for the first nine months of 2020 now shows that the serviced offices sector still managed to achieve 4% growth. I think this is testament to the speed at which changes were made. Most impressively has been the ability of operators to respond to the array of new challenges and develop COVID-secure workspace.”
Lockdown’s impact on urban economies was equally swift and visible. Their office landscapes reveal that many companies have either furloughed employees or offered them the chance to work from home.
However, KWB Director, John Bryce, says there’s also been a steady and consistent upturn in demand for serviced offices in out-of-town locations.
Out-of-town serviced offices on the up
John says: “It’s counterintuitive, given the avalanche of negative commentary about the future of offices we saw in the summer. Nevertheless, there are now clearly two influences acting in parallel. I believe they’ll define the make-up of the office sector for years to come.
“In urban areas, many occupiers are still assessing their future needs for office space. Equally, many of their employees are still deciding how to balance working from home against returning to the office.
“At the same time, there are companies and organisations who need office space, but don’t want to commit to multi-year leases. These occupiers have evolved new and more agile ways of working, and are looking at suburban locations where lease lengths are significantly shorter.
”It’s true that concerns about the safety and availability of public transport – whether that’s train, bus or tram – still remain. However, the availability of a high level of parking spaces also makes out-of-town serviced offices more appealing.
”I think employers and employees will have time over Christmas to reflect how they want their 2021 to look. Following that, more occupiers will look to take serviced office space outside urban locations, and more individuals will choose to work away from our city centres.”
Decisions from the top
UBC’s Johnson agrees that flexibility of both lease and office space are increasingly important. Going further, he identifies a third influence underpinning occupier decision-making.
“We’ve already seen major companies and organisations actively decentralising their workforces. Realistically, I don’t expect that trend to slow as we move into 2021. Once we reach Spring, I think we’ll see a significant and sustained upturn in the serviced offices sector.”