More than half of UK landlords intend to introduce additional flexible workspace across their portfolios, according to research by The Instant Group.
The firm polled more than 200 flex operators and landlords for its 2023 UK State of the Flex Market report and found two-thirds of flex operators also intend to increase their footprint in the next two years.
Although flex occupancy rates are expected to remain 11% lower than pre-pandemic levels by the end of the year, 78% of landlords report seeing an increase in demand for flex space over the past year and The Instant Group anticipates growth of 18% over the next two years, with demand hitting a record high by 2025.
James Rankin, head of research and insights at The Instant Group, said: “With half of UK landlords planning to independently add more flex space to the market, flexibility continues to sit at the heart of the office sector. Despite this positivity, we are seeing both short-term and longer-term macroeconomic factors impacting market conditions, and the supply side of the market is feeling the pressure.
“To counter these headwinds, our research shows that the supply and demand imbalances across the market present a clear opportunity for investment and growth. Adopting a data-focussed approach to gain visibility into local market dynamics such as supply, demand, occupancy and transaction rates, will enable operators, landlords and investors to both identify the highest potential assets and fine-tune existing asset performance.”
Gavin Foreman, executive director, UK partnerships at The Instant Group, added: “Although demand for flex remains relatively stable, our research and market sentiment show a silver lining for the UK flex market. Constant occupancy rates and the fact that flex occupiers are staying put suggest that other forms of flexible space – flex leases, managed and turnkey workspaces – will increasingly appeal to occupiers.
“For workspace providers to succeed in the wider flex sector and to combat competition on pricing, design, environmental impact, and overall user experience, they will need to be laser focused on data and insights to be profitable. We will undoubtedly see a need for aggregated market data to gain the level of granularity and insights key stakeholders need.”
