New research from the Business Centre Association (BCA), in collaboration with CBRE, finds the serviced office market continuing to thrive despite Brexit.
The research, launched yesterday (3rd July) has found that the business centre sector has seen an increase in turnover of 13%, with serviced offices providing a business environment for around 11% more workers in 2015 and 2016 across the UK. The expansion challenges fears about the impact of Brexit on the sector and continues even with ever increasing competition from new entrants into the market. The sector is now worth around £3.3bn in terms of turnover, up from £2bn in 2013.
The findings come from “The UK Business Centre Market” report which surveyed 580 business centres, including BE Offices, to asses the current state of the market. Participants represent 23% of the sector across the country. Overall, the report found the UK wide business sector is now home to 93,000 individual small businesses which employ over 480,000 people, supporting around £18bn of GDP.
Interviewed for his thoughts on the findings of the report, Simon Rusk, Finance Director and co-founder of BE Offices, commented on how well the industry is doing despite the slight slowdown caused by Brexit.
Asked about future plans for BE Offices, Simon spoke of the company’s plans for expansion into Midtown and the West End, with a focus on technology infrastructure and customer service.
The positive figures for the sector come amid wider economic concerns around Brexit. As part of the report, 38% of operators sampled said Brexit had a slightly negative impact on their business, 34% of operators sampled said it had no impact and 20% said it had a positive impact. Whilst it was felt there was an initial pause in activity after Brexit, demand for space has recovered.
Speaking on the impact of the EU referendum on the sector, the Chair of the BCA and Director of Sales at Bruntwood, Andrew Butterworth, said:
“After the referendum, almost immediately enquiry levels and demand levels fell…but they have come back and are now tracking long term averages. Business confidence started to return and people decided they needed to get on with running their businesses. As recent investment and acquisitions in the sector demonstrate, the prospects for the future of the sector are extremely positive.”
Whilst the sector has traditionally been seen as a stepping stone on the way to long-term leases, the evidence suggests that the sector is now being seen as a long-term option with 39% of businesses now staying in businesses centres for at least three years, an almost three-fold increase on 2014.
Commenting on the findings presented within the report, the Executive Director of the BCA, Jennifer Brooke, said:
“Our sector continues to push to the front of the commercial sector, with operators able to respond to customers and technology in a way which the traditional office market cannot. Whilst 2016 was a year of some uncertainty for many in our sector, this survey shows that the sector continued to grow and thrive amidst the instability created by political events. And, of course, Brexit has not and could not have stopped the pace of technological innovation or stemmed the ever-increasing aspirations of customers for higher quality space and more responsive service from our members. The sector looks set to respond positively to what is likely to be a challenging few years to come.”
Miles Gibson, Head of UK Research at CBRE, which conducted the research, commented:
“Our annual survey of flexible space providers confirms that the workplace is now changing very rapidly. Business centres are turning the very idea of the office upside down, and their model is proving very attractive, with growth in customers averaging 28% each year between 2013 and 2016. The customer expectations created by flexible space providers present both challenges and opportunities for landlords more used to dealing with long term leases and conventional fit-outs.”