What does the next decade hold for the serviced office market?

I’m often asked what the office landscape will look like in 10 years from now. To make that sort of call, one should consider a range of factors, starting with how office space has developed over the past five years. Prior to Covid, flexible working was an anomaly. We can all see how this is not the case now, and it will be even less so by the early 2030s.

It’s also safe to argue there will be a merging of product types across the spectrum of office real estate. People looking for office space will decide on a building based on the model of consumption – how they occupy it.

Think of it like hotel accommodation. On the simplest end of the spectrum, you will have an option similar to ‘room only’; this will be a basic space that the occupier fits out itself. The next step up includes a few enhancements – like booking a bed and breakfast package, or a Category A+ fit out, a little like going half-board. At the most premium end of the spectrum is ‘full board’ – a fully fitted office space, or all-inclusive – fully serviced accommodation.

Essentially, workspace providers will continue to evolve as brands in their own right. This allows potential clients to buy into their office space, the same way tourists interact with established hotel brands.

We are already seeing occupiers seeking more than just the physical space. The focus has shifted from practicality only, to offering a more holistic experience. Customers are looking for more from their workspace, this includes everything from aesthetically pleasing interiors, wellbeing, hospitality services and environmentally conscious practices.

Landlords need to design buildings that provide tailored solutions for occupiers. For this reason, I believe the industry’s growth won’t be driven solely by the biggest players. Instead, it will come from landlords who diversify their offerings to meet the market’s flexible needs. Prioritising the client in workspace design is key – success will centre on who can adapt and innovate.

The valuation approach by landlords and investment funds will also need to change. Serviced offices have generally been deemed as low-value operations, but this is a mistaken approach; such space actually adds value to a building and so requires a valuation which reflects this.

By 2034, the availability of data in the office space market will likely improve significantly. While there is a lot of information in today’s market, it’s not sophisticated enough for landlords and investors to consistently make well-informed decisions. This must change for the market to thrive.

I believe we will also see an increase in M&A activity among workspace operators over the next 10 years, but that it will be more measured than has been the case so far.

I see agents and brokers becoming increasingly stretched and pushed harder to deliver, especially as part of a more regulated industry. Even as the investment gradually grows, this pressure will likely continue.

Investment needs to come back into the marketplace for office solutions, and currently investor confidence in the market is low. If the sector is to thrive, as we know it can, it is crucial that this changes.

If the workspace industry can show its true colours and clearly demonstrate how it can help companies find the right accommodation, the rationale for investors getting involved will become much clearer. And that will benefit everyone.