Flexible workspace’s regional moment is becoming an investment reality

For years, the UK flexible workspace sector has been framed as a London-led story. The capital has dominated both perception and capital allocation, while regional markets have been viewed as secondary, attractive, but less certain.

That gap between perception and reality is now becoming much harder to ignore.

New data – the first of its kind – from HEWN’s Flexible Workspace Returns Index, covering Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester, shows a sector that is not only performing across the regions, but in many cases outperforming traditional office metrics and doing so with remarkably limited supply.

Across the Big Six cities, flexible workspace still accounts for a small share of total office stock, in some cases as little as 4%. Yet over the past five years, premium flexible workspace has consistently outperformed prime headline rents, often by a significant margin. Mid-market products have also demonstrated resilience, frequently matching or exceeding traditional benchmarks.

For investors, that combination of strong performance and constrained supply should stand out. The question is no longer whether flexible workspace “works” in regional cities. It is how quickly supply responds.

Demand drivers are well established. Hybrid working has reset occupier expectations, with greater emphasis on flexibility, quality and service. Businesses are not simply reducing space; they are rethinking how it is used. In that context, flexible workspace is increasingly aligned with what occupiers actually want.

What is emerging across the regions, however, is not a single trend but a series of distinct market dynamics. Birmingham is attracting growing operator interest, with strong demand and more pronounced fluctuations in returns, a sign of a market still adjusting to increased activity. Bristol highlights how rising headline rents can compress the apparent performance gap, even where flex demand remains strong.

Edinburgh continues to deliver standout returns at the premium end, while Glasgow is building momentum. Leeds reflects the impact of regeneration on supply, and Manchester stands out for its consistency offering one of the most stable and predictable performance profiles across all product tiers.

For capital targeting the sector, this variation is critical. It points to opportunity, but not uniformity.

What the index provides, for the first time, is a consistent way to assess that opportunity. By directly comparing flexible workspace returns with traditional office rents, it introduces a level of transparency that has historically been missing. That matters, because flexible workspace is increasingly moving from an operational niche to a core part of office strategy.

For landlords, it raises more immediate questions around asset positioning. With occupier demand continuing to shift towards higher-quality, service-led space, the risk is not just underperformance, but obsolescence. For investors, the sector presents a clearer route to capturing that demand particularly in markets where supply remains constrained.

The broader picture is one of a sector still in transition, but with strong underlying fundamentals. Low market penetration, proven performance and evolving occupier demand all point to continued growth. The pace of that growth will vary by city, shaped by local supply pipelines and economic drivers – like authority mayors – but the direction of travel is clear.

Flexible workspace is no longer a London-led trend being exported to the regions. It is a national market story and increasingly, an investment one and the returns look attractive.