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Flexible office space Europe and the UK - statistics & facts

Whether you call it flexible, coworking or shared workspace, serviced office spaces allowing short-term leasing to growing small firms, freelancers, entrepreneurs, and other professionals are changing the commercial real estate industry in big cities. These workspaces provide fully equipped premises, often with reception and meeting rooms.

There are numerous factors that contribute to the growth of the flexible workspace sector. Large European cities, such as London, Paris and Berlin, which concentrate business activity, provide the perfect environment for the development of this market. For businesses, coworking can bring about the reduction of capital and operational expenses, increased productivity, ability to scale up or down, manage risk and increase their geographical reach. The effect on the office real estate industry is already visible - in London and Amsterdam, which are among the biggest office real estate markets in Europe, coworking constituted approximately five percent of the office real estate take up in 2018. According to European industry experts, flexible workspaces are among the real estate sectors with high investment prospects in 2020.

For real estate owners, that means embracing innovation and alternative leasing models and potentially parting ways with the stability of the traditional leasing model. Currently, there are three main approaches: leasing, partnership/management, and platform. In leasing, the landlord leases the space to a coworking operator at market rents, usually long-term, while the operator sublets to short-term tenants. In the partnership/management format, the coworking operator does not sign a lease, but is contractually obliged to manage the space. In the platform model, the owner leases directly to tenants. The platform model is the one with highest operational risk due to variability in income, but it often suggests higher operating income to asset value ratio.

The result is a booming industry of coworking operators. In London alone, which is one of the undisputed leaders on the European market, there were 411 operators, leasing nearly 170 thousand square meters of flexible workspace in 2018. Among the leaders on the market, both in Europe and in the UK, are Regus, part of the real estate holding company IWG, as well as WeWork.


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