The increasing strength of the serviced office sector has been confirmed after operating profits at leading provider Regus jumped 27% to £104.3m and its revenues climbed 15.8% to £1.68bn.
Leasing activity in the central London office market hit its highest level since 2007 in 2014, with deals signed for 12.4 million sq ft of new lettings.
And serviced offices experienced rapid growth in tenant demand, reflecting the increase in London’s number of small businesses. Leasing volumes rose 78% in 2014 to reach 1.2 million sq ft.
Serviced offices, which provide managed, fully-fitted and furnished flexible space for business, are increasingly popular and of growing importance in the provision of space within the City.
Between 1995 and 2014, the amount of serviced office space has quadrupled to nearly 2 million sq ft, with the number of offices more than tripling from 25 to 85. An estimated 2,250 businesses now occupy these buildings, housing 18,000 workers.
Traditionally, serviced offices have been perceived to be popular among fast-growing SMEs, but the City of London Corporation reports that around half of serviced office space is occupied by mature SMEs that do not envisage rapid growth. Some occupiers choose to stay for up to five years, although the average length of stay is 18-24 months.
Regus is aiming to expand the serviced office market by launching work space in universities and public libraries in a bid to bridge the gap between higher education and working life.
The serviced office provider signed its first deal with Helsinki University last year and has also partnered with the Singapore government to open facilities within its public libraries.
It is now eyeing further opportunities, including opening in libraries across the UK: “We are opening new interfaces between university life and business life,” said chief executive Mark Dixon.
Regus invested £207m last year, opening centres in 452 locations to take it number of centres worldwide to 2,269.