More than three-fifths of the UK’s commercial landlords are struggling to attract tenants to traditional offices as businesses’ workspace demands have changed rapidly during the pandemic, new research by infinitSpace has revealed.
The European flexible workspace provider has commissioned an independent survey among 204 UK commercial landlords, all of whom own one or more office buildings in the UK. It found that 62 per cent are currently struggling to attract prospective tenants to fill their traditional office spaces. Almost two thirds (64%) reported having seen a ‘notable shift’ in tenants’ demands during the pandemic, including terms and use of space. As a result, seven in ten (71%) office landlords plan to increase their flexible workspace offering in the coming five years.
Wybo Wijnbergen, CEO of infinitSpace said, “what businesses want and need from their office has been steadily evolving over the past decade, but the pandemic has kicked the pace of change into overdrive. Our research shows that, as hybrid working becomes commonplace and businesses look for more collaborative and engaging workspaces, many landlords are struggling to attract tenants if they don’t have flexible offerings.
“Encouragingly, most office landlords are responding to this challenge. From the terms of the leases and the facilities on offer to the ways their workspaces foster innovation and offer a great tenant experience – commercial landlords are evidently looking to transform their buildings to fit the ‘new normal’. “Our data shows that many traditional offices will be converted into flexible workspaces in the coming years. In many instances, this will involve the landlord themselves entering a long-term, inflexible lease with an operator, which then runs the flexible workspace in their building. But instead, office landlords should feel empowered to manage their own brands. This will lead to a more diverse and dynamic commercial real estate market.”
infinitSpace’s research found that UK commercial landlords currently dedicate an average of 33 per cent of their office portfolio to some form of flexible or co-working spaces. By 2026, this is forecast to rise 11 per cent to 44 per cent. Since the start of 2020, 59 per cent of office landlords have begun offering shorter and more flexible leases. Over half (52%) added new facilities to allow tenants to collaborate when inside the building, such as meeting rooms or breakout areas, while 63 per cent have added facilities to improve the wellbeing of tenants, such as a gym or relaxation space.