Three flexible offices operators have committed to new locations this week, underlining recovering demand from companies as they look to accommodate hybrid working while they work out long-term real estate requirements.
Runway East has signed for a seventh flexible workspace location, taking a 20-year management agreement on all of Tabernacle Street in Shoreditch, CoStar News can reveal.
The group has signed with the private landlord for 22,884 square feet of offices at 52-60 Tabernacle Street. It now has five locations in London, in Soho, Borough Market, Finsbury Park, London Bridge and Shoreditch, and two in Bristol at Bristol Bridge and Temple Meads.
It says the Shoreditch space will include a "massive outdoor terrace just minutes from Old Street roundabout" and will be a "showstopper site for any ambitious business".
Douglas Green of g8 arranged the management agreement. Farebrother is the letting agent.
Separately, The Boutique Workplace Company has signed a new 10-year lease on 73 Watling Street in London. The transaction is the flexible workspace group's first leasehold transaction since the pandemic began and will see the 9,311-square-feet building reconfigured to target SMEs with a "hybrid workforce, post-COVID".
Acting on behalf of Boutique, Paul Glinsman of Glinsman Weller, said the group had been working on the acquisition prior to COVID and it is the "perfect offering for Boutique and their flexible workspace occupiers". Due to open in March 2022, the offices will have smart TVs to connect workers with a hybrid or remote workforce. Occupiers can also access 12 of The Boutique Workplace Company’s membership lounges and 40 meeting rooms at their 30-plus workplaces in London and the UK.
Dan Wheble, CEO at The Boutique Workplace Company, said the way people work has evolved "massively" in the last two years. He says more and more employees are "understanding the benefits of working for smaller, boutique companies offering flexibility, adaptability and responsiveness".
“Our model is based on quirky buildings that fit small-medium sized businesses. They have character but needed careful planning to refit and are suited to smaller companies. Watling Street has amenities such as outdoor space and smart TVs in every office, making it an innovative space post-COVID.”
Also this week, Abrdn has signed a five-year management lease agreement with flexible workspace operater Socius for 14,000 square feet of offices at The Urban Building on Albert Street in Slough.
The space covers the part ground and first floors. Socius will redesign and upgrade the existing space. Hewn was enlisted by Abrdn to provide strategic support and negotiate the agreement.
Will Kinnear, director at Hewn, says the flexible workspace market is booming, "aided by the pandemic and flexible working practices".
Cameron MacKay, senior asset manager at Abrdn, says the institutional investor is committed to working with operators on flexible workspaces to diversify its portfolio and "provide these valued spaces within the communities we operate in".
Steve Finnegan, managing director at Socius, says the flex space market is an "incredibly exciting place right now, especially where building owners and asset owners are entering this space".
The lettings come as real estate experts expect 2022 to see a plethora of new flexible offices strategies as companies are forced to grapple with their real estate needs while remaining uncertain how the extended period of working from home will ultimately change the market.
JLL picked out the flexible office market in its recent property predictions seminar saying it will have a busy year, with occupiers "mindful of uncertainties around hybrid working and sometimes unwilling to commit to longer-term space".
In November 2021, WeWork, the global flexible space provider, said its gross sales in the third quarter in London equated to a staggering 37% of all of the capital’s traditional office take-up as it posted its first figures since its public listing. It also signed a tie-up with Upflex this week.
The group said the "outsized" performance was mirrored in its major markets in the US and Europe.
Mark Stansfield, head of UK analytics, said: “Runway East’s recent letting at 52-60 Tabernacle Street is the latest in a string of deals by co-working firms in London in recent months. Nearly 400,000 square feet has been taken by co-working firms since the beginning of September, more than in the previous 18 months combined.
"Established firms like Fora, Regus and Landmark have re-entered the market, and new entrants like Infinitspace and x + why have emerged. Co-working firms are seeking to capitalise on growing demand for flexible, managed spaces as companies continue to evaluate space needs in a post-pandemic world. Half a dozen lettings have taken place in the past two months alone, with the sector rapidly re-emerging as a key office demand driver in the capital.”
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