The office reimagined as hybrid working evolves

The ARC Club in Camberwell Green, southeast London, opened in January this year

ARC CLUBS

This market dynamic is being supported by enquiry levels at firms such as Workspace Group, the FTSE 250 company. It said it received 831 enquiries a month at its 60 sites across London in the three months to December, a return to pre-2020 levels.

Providers in the capital and outside are adding new sites. Alex Lloyd Davies, the co-founder of the Oxford-based co-working business The Wheelhouse, said: “It’s a burgeoning space. People are rethinking how they see the office. The future is definitely a much more flexible office environment.”

The Wheelhouse launched in 2017 and has ten venues, mainly across the Midlands, with between 25 and 50 desks in each. It opened its latest in a former RBS bank branch in Newcastle-under-Lyme, in Staffordshire, in February. Its next will be in Watford in Hertfordshire.

Customers range from teams at startups to the self-employed and employees of companies preferring not to work from home. “We are finding companies that have leases coming up for renewal are now thinking ‘do we need something more flexible?’,” said Lloyd Davies.

The company does not charge a deposit and its monthly fees vary by location. A dedicated desk for full-time work in Sale, south Manchester, costs £225 a month, while 50 hours of hot-desking in Birmingham costs £99 a month.

Hannah Philp is also expanding her co-working venture, ARC Club, in London. Philp, 36, looks for long-vacant commercial sites to open informal spaces where workers and business owners can escape the distractions of home life to be productive and build their networks.

Her first site opened in Homerton in July 2020 and the second in Camberwell Green in January this year. Working with her co-founder, Caro Lundin, an architect, they plan to open eight more sites in London suburbs. “We are really keen to get going on them quickly,” she said.

They see teams from small businesses using their venues, alongside employees of larger organisations and freelancers. Hot-desking, as well as dedicated desks, storage, mail handling, printing and barista-made coffee, are available. The cost is capped at £249 a month for the heaviest users, although the most popular rate is a £149-a-month package.

Feedback from customers has been positive, said Philp. “The driver is how great it is to have somewhere that is as professional as the office but not the pressure of the office. Somewhere where you could be really productive for four hours and then go and pick up your child from nursery.”

She believes the rapid adoption of hybrid working as a result of the pandemic has been a game changer. “We are now relevant to so many more people,” she said.

Bigger businesses and investors agree that the changes to where people work are here to stay. The landlord Landsec, a FTSE 100 company, launched its flexible office brand, Myo, in 2019 amid pre-pandemic interest in more bespoke, flexible workspaces. The company said occupancy at its site in Victoria was back to 98 per cent and its recently opened Liverpool Street location was at 60 per cent. It will open four new flexible offices over the next two years.

Consolidation among flexible office providers is also taking place, with private equity-owned The Office Group last week announcing plans to merge with its peer, Fora, to create a group with 72 sites across London, Cambridge, Oxford, Reading, Bristol and Leeds, as well as in Europe.

The Wheelhouse, an Oxford-based co-working business, now has ten sites including this former RBS branch in Newcastle-under-Lyme, Staffordshire

WHEELHOUSE

Earlier this month the FTSE 250-listed IWG, which owns flexible office brands such as Regus, invested £270 million to buy out the private equity backers of The Instant Group, which is led by Tim Rodber, the former England rugby player.

IWG’s founder and chief executive Mark Dixon, 62, said it was investing because the market is growing. “Bringing workspace solutions to the heart of local communities is rising sharply, and it is set to accelerate even further,” he said.

Its research suggests that 77 per cent of employees want a place to work closer to home for their next job and that half would quit their job if forced back to the office for five days a week.

Lessons have also been learnt from the experience of WeWork, the flexible office pioneer that overexpanded and had to extricate itself from 150 sites around the world. It remains one of the largest commercial tenants in London.

A former head of WeWork in Europe, Wybo Wijnbergen, 46, is now running his own “white label” flexible workspace business, infinitSpace, with his brother Wilco, 43. While Wijnbergen lives in Berlin and his sibling in Amsterdam, London is home to their first site at Aldgate Tower, a 16-floor building that opened this month. They are working with the landlord Brookfield Properties and the 60,000 sq ft space can house 1,250 people.

“London is way more receptive towards flex than any other city [in Europe],” said Wilco. He cited the example of a 200-person company that initially booked space for a team of 40 to work at Aldgate Tower.

“They knew they needed to do something with flex but not exactly what,” he said. “They decided to move part of their team to Aldgate Tower on a one-year contract but with a break clause. Two weeks [later] they are saying it’s the best thing and are very much willing to move their entire company to our location.”

Employers are having to “reset” their view of offices, Wilco said. “The old way of workspace, the long-term lease, those days are gone. People want inspiring workspaces.”

Wijnbergen added: “Every landlord should look at their properties and convert part of that space into a flexible solution. We need to create as many spaces as possible so everyone can find an inspiring, collaborative workspace within a 15-minute commute.”