Brexit effect impacts Scotland's office market

31st May 2019

The number of Scottish businesses considering a move into flexible workspace has increased by almost a fifth in the past year amid Brexit uncertainty.

New research from the flexible workspace finder Officio shows companies seeking flexible accommodation in Scotland increased markedly during the year to April 2019 as larger firms sought to streamline operations and make themselves more nimble.

Demand for flexible workspace, office deals made on short term agreements often bundled with services such as telecoms, are seen as an indicator of the future health of the economy as they appeal to start-ups, fast growth companies and to larger firms who wish to make themselves more responsive to a fast-changing market.

The number of businesses enquiring about flexible workspace was up by almost a fifth in both Glasgow (19%) and Edinburgh (18%) as firms investigate their accommodation options amid the political turmoil of the UK's Brexit vote.

But while enquiries were up in both cities the number of firms taking flexible space remained the same in Glasgow and decreased by 12% in Edinburgh with Officio stating that many companies are simply checking their options while waiting to see what the politicians deliver.

The average number of desks per workspace grew by 52% in Glasgow, reflecting the UK wide trend of larger companies moving into flexible workspace.

The average cost per desk in Edinburgh rose by almost a fifth from £205 a month to £245 but agreed contract length fell by 17% from 9.3 months to just 7.7 as larger firms demanded more flexible terms.

In Glasgow the price per desk fell significantly from £307 to £168 a month on average - a drop of 45%.

Across the whole of Britain the average number of desks per office rose from 5.4 to 6.9 as larger companies chose flexible workspace to allow themselves more room to manoeuvre amid Brexit uncertainty.

London saw enquiries for flexible increase by almost a third (31%) although the number of deals was slightly down on the previous year, recording a four per cent fall.

In the financial district there was a sharp rise in the number of companies enquiring about flexible space, up almost two thirds (64%) on the previous year. But the number actually taking flexible workspace deals in The City fell by almost one fifth (18%) perhaps reflecting an increase in average price per desk from £645 to £705 a month.

In Canary Wharf a fall in the price asked per desk from £628 a month to just £408 led to a rise of almost two thirds (62%) in take-up.

London's West End is also proving increasingly popular, with 35% more flexible workspace deals agreed and a 49% increase on the average contract value.

Officio CEO Chris Meredith said: "Our latest figures reveal a fascinating picture of how businesses across the UK are responding to Brexit uncertainty.

"It seems many larger companies are considering a move out of traditional leasehold office space and into flexible workspace.

"This could be because they don't want to commit to long term leases in the current climate of Brexit uncertainty and understand that by moving into flexible workspace they can make their operations more nimble and able to respond to changing market conditions more quickly.

"While the number of deals done has fallen slightly the value of the deals and the contract length both increased which also indicates that larger firms are taking up flexible workspace.

"With Brexit remaining unresolved and business uncertainty increasing we expect to see the trend towards flexible workspace increase further this year."

Report by Officio - https://askofficio.com/