Flexible office spaces are in high demand, and this sector of the commercial property market is growing.
In London, the US-based Carlyle equity fund bought three London buildings to convert to flexible office space. British Land, a traditional British office landlord, has announced that it is launching its own flexible office space brand. These deals have fuelled speculation that other investors will enter the flexible office space market.
There are two main types of flexible office space systems, hot desking and serviced offices. Hot desking involves renting a desk on a pay as you go basis. This arrangement particularly suits freelance workers who do not need a full-time office. Serviced offices are ones where various companies rent office space and share services such as reception areas, refreshment facilities, IT, and tech support. Serviced offices usually have meeting rooms available.
A recent report by Capital Economics and Nottingham Trent University estimated that the flexible office sector is worth about £16 billion, and they forecast that this could rise to between £62 billion and £120 billion by 2025.
Purchasing office space for use as flexible offices can be financed through commercial mortgages. A mortgage broker can find the best lender and commercial mortgage deal for investors.
There is no set methodology for calculating the expected income streams of a flexible office project when assessing the profitability of investments. Giles Fuchs, the CEO of flexible office organisation Office Space in Town, wants standard value calculations introduced to make the sector more attractive for investors.