Dublin office market sees increase in demand for co-working space
- The sector accounted for 8% of office leasing activity in Dublin’s central business district in 2017.
- UK Holds the Largest Global Share of Flexible Workplaces
- London remains global capital for co-working spaces, ahead of New York
- Central London saw 2.5m sq ft leased to flexible workspace providers in 2017, a 190% increase on last year
- 7% of take-up in Amsterdam let to the sector in 2017, up from 4.5% in 2016
LONDON, 23 January 2018 – Demand for flexible workspace across the world saw record growth in 2017, according to the latest research from Cushman & Wakefield.
The firm’s Co-working 2018 report ( link : http://www.cushmanwakefield.co.uk/en-gb/research-and-insight/2018/coworking-2018/ ) reveals the extent to which the sector has evolved and matured with the UK leading the way globally. The flexible workspace sector accounted for 21% of all office leasing activity in London in 2017. This compares to just 8.5% of leases in 2016. The UK now holds 32% of global share of flexible workspaces, which is more than the 27% in the United States and 22% in EMEA (excluding UK).
Aisling Tannam, Director, Offices at Cushman & Wakefield Ireland said “A key trend in the Dublin office market in 2017 was the increase in demand for co-working or serviced office accommodation. The sector accounted for 8% of office leasing activity in Dublin’s central business district in 2017. This compares to just 0.7% of leases in 2016. 2018 will see further expansion by the sector as a considerable amount of space is currently reserved or signed to occupiers such as WeWork, Regus, The Office Group and Iconic Offices.
The CBD has dominated this take-up but as the sector expands we expect to see significant takes in city edge and key suburban locations
Central London saw a record 2.5m sq ft of lettings signed for flexible workspaces, more than 21% of all commercial office leases in the capital. The average rent paid by flexible workspace providers across the capital also rose to £65.50 per sq ft in 2017, a 10% increase on the previous year.
London has an estimated total flexible workplace stock of over 10 million sq ft, which is more than double the estimated 4 million sq ft in second-placed Amsterdam. Both cities have seen a significant surge in transactions from the sector, with activity in Amsterdam reaching 296,000 sq ft or 7% of total leasing activity in the city during 2017..”
Elsewhere in Europe, burgeoning tech centres have led to strong uptake of flexible workplaces. Berlin is expected to be a beneficiary of Brexit as a home for start-ups and WeWork has huge expansion plans for up to 1,000,000 sq ft in the city. The success of Stockholm’s tech sector has led to declining vacancy rates, coupled with high rents, which will help the growth of the flexible office market.
Report author Elaine Rossall, a Partner in Cushman & Wakefield’s EMEA Research & Insight team, said: “Flexible workspaces are now a vitally important part of the European economy, and an increasingly familiar presence in our cities. The popularity of co-working has seen demand continue to grow exponentially across the continent. Amsterdam is a great example as it has one of the highest proportions of independent workers in the EU, with an entrepreneurial and creative culture that is nurtured by a flexible workplace.
“Co-working not only offers flexibility and room to grow, but can also improve the employee experience, revitalise corporate culture, and minimise companies’ exposure to long-term leases. One of the additional key drivers of the market will be accounting changes that make shorter-term leases of flexible space more attractive to larger businesses.”
Global cities look to flexible workplaces
London has cemented its position as the global leader for flexible workplaces, easily outstripping New York in terms of both space and number of operations. Since 2012, flexible workplace leasing has represented an average of 2.9% of the market in Manhattan, compared to 10.6% in London.
Elsewhere, although from a lower base, there are a number of other European cities seeing real growth trends in the sector. For example, in Dublin, flexible workplace take-up increased from 0.7% of total take-up in 2016 to almost 7.9% in 2017. Similarly, Munich recorded 375,000 sq ft of take-up in 2017 compared to 77,000 sq ft in the whole of 2016. France is currently working on reforms to increase flexibility in the workplace. Station F, a new start-up superhub in Paris which opened in June, can house up to 1,000 start-ups.
Finally, in Spain, the flexible workplace market is also developing in both Barcelona and Madrid with business centres like WeWork, Regus and other collaborative spaces increasing their offer. In 2017 there has been more than 315,000 sq ft of take-up with the trends expected to grow across both cities.
Over the next year, the sector will see increasing demand for co-working space from larger businesses, as corporate occupiers embrace a more dynamic co-working culture or shorter and lower-risk leases. Uncertainty around Brexit may be driving demand for flexible workspace in London, as major corporates look to avoid long-term space commitments.
Growth will continue to accelerate across Europe, riding on the success of the tech sector, a flourishing start-up environment and projected office-based employment forecasts of growth of circa 6% in the next three years.
Cushman & Wakefield predicts that in the future, every large multi-let building will have a proportion allocated to flexible workspace as landowners look to take advantage of growing demand and meet the needs of potential occupiers.
Elaine Rossall added: “One of the key issues will be growing pressure on the supply of suitable co-working space and whether landowners and developers can keep up with demand. Nevertheless, we expect flexible workspaces will account for at least 10% of the total market across the UK within the next 10 years and for the rest of Europe to experience similar growth.
“Providers will increasingly focus on 1-3 year leases over short-term membership models, as these represent more sustainable and lower-risk tenants for occupiers.
“While offices have been the traditional source of space, pubs, hotels and libraries are increasingly of interest to flexible space providers, building on the popularity of coffee shops and cafes as flexible workspaces. Any brick-and-mortar business that is vacant for a period during the day could be utilised for flexible working, and the availability of vacant retail units could see co-working become a fixture of high streets across Europe.”
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.