Newsletter Q3 2017 UK

Newsletter Q3 2017

Shared offices in prime locations attract the strongest demand, USA.

Steady increase in volume of office lets (sqm) in shared offices of 7,000+ sqm (20,000 sqft), USA Steady cre se in volume f o ce lets (sqm) in shared o ces of 7,000+ sqm (20,000 sqft), USA

- 50,000 100,000 150,000 200,000 250,000 300,000 350,000

Prime 126 sqm

Class A 591 sqm

Class B 428 sqm

Class C 91 sqm

2014Q4

2015 Q1

2016 Q1

2015 Q2

2015 Q3

2015 Q4

2014 Q3

Source: JLL Research, Chicago Note: O e lets over 7,000 sqm

Source: JLL Research, Chicago Note: Office lets over 7,000 sqm

Source: JLL Research, Chicago

Focus on flexibility Since the financial crisis and the ensuing economic downturn, the office occupational market has seen a great focus on company overhead costs per employee and a stronger demand for flexibility. Businesses demand space-efficient premises where the net area requirement per employee is reduced by means of a more optimal use of shared service facilities as available in multi-user properties, etc., including reception desk, canteen and meeting facilities as well as shared service options such as massage, hairdressing and food to bring home. Commercial lease costs include not only rent but also the operating and utility expenses relating to the lease premises. This is one of the areas where energy savings, space-efficiency and sharing operating costs with other tenants may serve to make the overheads or cost per workplace less expensive in one lease unit as opposed to another. Whereas multi-user properties have seen mounting interest for many years now, office hotels and shared work-places have started to become more commonplace in the Danish office letting market only in recent years. Providers of the latter offer the opportunity to rent fully furbished office workplaces

with a range of selected services included. In return for these services and the higher degree of flexibility associated with this type of lease, the tenant typically pays a slightly higher rent. It is easy to gain access to an office or meeting room, etc. in only few clicks on a website, and unlike ‘traditional’ leases, you as a tenant are no longer bound by long-term tenancy agreements. Flexibility in terms of unit size and lease term may often be crucial in a world of highly changeable business conditions. Experience from abroad In the US office property market, the leasing/letting of shared office workplaces to very small company start- ups and one-man businesses is attracting increasing interest. In Chicago, the volume of shared workplaces in terms of floorspace has doubled every year since 2011, in spring 2016 exceeding 9 million sqm, according to estimates by JLL Research, Chicago. It is worth noting that although this niche market accounts for only 0.7% of today’s US office market overall, it was in fact virtually non-existent just a few years ago.

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