Serviced Offices: An Overview

A serviced office used to indicate a poor-quality business space suited only to those at the bottom of the corporate pile. But the sector has seen rapid expansion and transformation in the past decade. The amount of "flexible space" on offer - at least in the UK's major business centres - will come as a shock to those who cling to old stereotypes.

Tim Edghill, regional director in Jones Lang LaSalle's corporate finance team, believes that the sector's past and anticipated future growth is a reflection of changing business patterns - all driven by the need for flexibility on a global scale.

He says: "If you look to the US as an example, IBM, by the end of last year, already had four out of 10 workers with no fixed desk. The technology companies are leading this change, trying to get closer to their clients, and they are being copied by management consultants."

Nevertheless, despite this optimism for the future, some landlords remain wary of serviced offices, believing that these operators will bear the brunt of any slowdown or recession. But many in the sector say that its record is partly a result of its exposure to the dot.com crash.

Edghill believes that the market has considerable room for growth. He says: "I don't think there is anything like enough serviced office space in the UK to suggest that there would ever be a price war if there were a slowdown.

"Less than 1% of office space in the UK is serviced or flexible. In the US that figure is around 15%. That gives you an idea of the scale of difference between the two markets. There is clearly an opportunity for significant growth."

Source: Estates Gazette Interactive. Date: 8 September 2007