SERVICED OFFICES ARE ON A ROLL

There are more boutique serviced offices than ever before. Old hands such as Regus are being joined by edgy new brands such as Work Life, which launched in London in 2015 and is now expanding out into other UK cities.

The Office Group is another company. Founded in 2003 by real estate professionals Olly Olsen and Charlie Green who wanted to convert beautiful buildings, the company now offers more than 50 buildings across the UK and Germany. Most are in London, but the company also offers office space in Bristol.

There are many others, including Yooserv in the Thames Valley, Clockwise in Cheltenham and Bristol, Perch in Bicester and the Wheelhouse in Oxford, Coventry and Cheltenham.

These spaces rely on people not wanting to travel into their main offices, but not wanting to work home alone either, preferring to be part of a community.

Could serviced offices in town centres herald a high street revival?

Guy thinks it’s likely that these office providers will begin to specialise in sectors – such as serviced offices for professionals, tech or the growing life sciences sector where laboratory space is automatically included.

Many new serviced offices are located centrally. And this could mean a revival of town centres.

Guy said: “Business parks, where many serviced offices have traditionally been located, might be easy to drive to and park, but they can be bland and soulless.

“What people lack working from home is community and amenity. But if their offices are in a town centre, there are coffee shops, other retail, bars and restaurants.

“And that can only be good news for town centre retail and leisure.”

Bristol is seeing downsizing and a ‘flight to quality’

Those views are broadly echoed by Simon Price, senior partner at Bristol-based property consultancy Alder King.

"The pandemic in 2020 was a major shock to the office market. And a number of occupiers thought ‘this is great, because we will never need to go back to the office again; we can just hand in the keys and everybody can work from home.

"But that hasn't proven to be the case and there's been a gradual return. And one of the key features has been a changing style of occupation and work patterns."

Many businesses have implemented hybrid working, with staff coming into the office to collaborate, train and interact with colleagues.

With many employers experiencing a smaller headcount, businesses are looking to downsize from pre-pandemic levels, says Simon.

"What we're particularly seeing at the moment is a flight to quality. Quite a large number of occupiers are deciding that they're going to take less space, but it’s going to be better quality.

Businesses are looking for premises where they can create an attractive work environment for staff and customers –something with the wow factor.

Eco credentials are also key

Occupiers are also looking for property that is more environmentally-friendly.

"The corporates are having to report what they are doing to improve the sustainability of their office space," says Simon.

"And rather than wait until the big push for net zero in 2030, what we're finding is a number of occupiers are now saying, 'okay, we're going to take that sustainable step now, and we're going to look to proactively improve our ESG credentials so that we can start to report that on an annual basis'."

At the top end of the commercial property market this, combined with the general desirability of Bristol, is creating competition for space and driving up asking prices.

"Bristol currently sits at the top of the regional office market rental league, with a recently achieved top end headline rent of £42.50 per sq ft, which puts it above both Manchester and Birmingham.

"And that's partly because Bristol is leading the way in terms of the delivery of that more sustainable, environmentally attractive space to occupy."

Commercial property agents are also seeing a drive from out-of-town business parks to city centre locations.

"When the pandemic first hit, there was a lot of talk about people wanting to get out of ‘unhealthy city centres' and into the green or open spaces that business parks offer," says Simon.

"But that hasn't proven to be the case. What we're seeing, particularly among companies that employ lots of younger people, is that they are actually focusing their interest on city centres because their staff want amenities.

"The best place to get younger employees back into the office and working and socialising together, is the city centre.

"And it's easier to get to by bike or public transport, and there's a growing focus on cycling-related amenities like showers, lockers and secure cycle parking.

"A good example of this is the Welcome Building – the biggest speculative office building ever built in Bristol city centre.

"Pre-Covid it proposed dozens and dozens of car parking spaces. Now it's got 19 car parking spaces in the basement and hundreds and hundreds of cycle spaces."

"It's also being constructed with a focus on sustainability – so it will have an EPC A energy rating and will be BREEAM outstanding. There's an auditorium, gym and a wellness suite, and there's a lot of demand for it."