The flexible workspaces segment has grown rapidly in the past years. Nonetheless, according to Flexible Workspace Outlook Report 2019 from global real estate advisor Colliers International, only a small proportion of city office space across Europe is taken up by flexible workspace, suggesting there is significant room for growth in the ‘Flex’ sector across all European cities. “In the capital, much of the demand for such spaces could come from companies looking to give employees the flexibility to work from different areas of the city, without having to go to the office every day. This would help employees with their daily commute, as Bucharest is regarded as one of the most congested major cities in Europe. Demand may also come from companies for whom business involves a series of projects that are limited in time, or from those who have a transition period to change headquarters or enter the market and need time to understand their business development speed and, implicitly, their real estate needs on the long term”, Daniela Popescu (photo), Associate Director Office Agency at Colliers International Romania, said.
In Bucharest, demand for flexible workspaces might come from companies seeking to offer their employees the flexibility to work from other parts of the city.
The number of flexible workspace operators across Europe has grown 135% over the last four years, with the number of flexible workplace centres increasing by 205%.
However, according to Colliers, as of end 2018, flexible workspace accounted for only 1.5% of total office space on average across the 22 major European cities surveyed, with the highest proportions recorded at just 5% in London and Amsterdam. Bucharest is slightly over the average, at 1.7%. That said, even at the top end of the spectrum, total take-up is marginal in comparison to the wider office market, suggesting the sector has not grown or expanded to excess.
“The shift towards ‘space as a service’, and not just a commodity is probably going to be the biggest driver of growth in demand for flexible workplace going forwards. Customer centricity is at the heart of this and is likely to see flexible workplace options rise to 10% of all office space in major European cities in the years ahead”, Tom Sleigh, Colliers’ Head of Flexible Workspace Consulting, Occupier Services - EMEA, said.
The Colliers report also highlights the many differences among European cities regarding the flexible workspaces segment. For example, Amsterdam and London are the stand out markets, the flexible workspaces accounting for 10-15% of take-up and 5% of total office stock at the end of 2018. At the other end of the scale, flexible workspace in Stuttgart and Dusseldorf accounted for only 1% of take-up and office stock at the end of last year.
In Bucharest, the flexible workspace market took off in 2018: the total take-up of office spaces generated by this segment increasing to almost 27,000 sqm. A lot of interest has been coming from new players on the Bucharest market (Mindspace, 3house) as well as the biggest name locally – IWG, which dominates the domestic scene through two brands: Regus and Spaces, with the latter leaning towards the co-working experience.
True co-working spaces – notably offering open area workspaces, not just mini-offices – accounted for a bit under half of the total flexible workspace market in Bucharest (around 40,000 sqm as of end-2018). In 2019, several new co-working spaces are expected to come online, adding more than 10,000 sqm to the market.
The EMEA flexible workspace market is very diverse and predominately made up of operators with only one or two locations. This provides huge choice for occupiers but also an opportunity for established operators to expand across the region via M&A activity.
Damian Harrington, Head of EMEA Research & Forecasting, Colliers International concludes: “It is difficult to consider this niche as a huge threat to the market, even with the prospect of economic cooling and diminishing levels of employment growth in the years ahead. Any upcoming economic contraction will really test the flexible workplace market for the first time, but there’s a strong chance that the peaks and troughs of older occupational and economic cycles will be smoothed out by the shorter lease-length options provided by flexible workspace operators. The economic commitment is far more manageable than that for conventional space as flexible workspace desk costs have diminished, just as lease lengths across the conventional market have been reduced to compete.”
