The way we work is changing. Firms of all sizes, across a variety of sectors, have increasingly started to supplement the traditional office spaces within their core real estate portfolio with a range of flexible and shared office concepts, such as co-working, in order to provide a choice of settings to their employees.

The growth of co-working in recent years has been impressive. JLL estimates the size of the global co-working market to be in the region of circa $210m (£150m) a month, and the number of individuals using co-working spaces is predicted to reach 1 million by 2018. Take-up of co-working space in London has grown exponentially, with 10 per cent of all the office space leased in central London in 2015 being provided by serviced office providers, many of whom offer co-working spaces, up from 4 per cent in 2013. The appeal of co-working has not been lost on larger firms, with big corporates embracing this new style of working.

Co-working in tech

The growing technology sector has demonstrated a significant capacity to utilise co-working spaces. The city of Liverpool, for instance, identified such arrangements as being an effective way of expanding the tech sector and set about creating a number of co-working spaces in the city, many of which exist in an area known as the ‘Baltic Triangle’. The reasons for the surge in tech firms, particularly tech start-ups, using co-working spaces are manifold.

For starters, tech start-ups, especially in London, are already on the move. The capital has witnessed a number of tech and media companies moving into cheaper premises in East London. Such is the extent of this movement that for every sq ft. of floor space given up by a tech or media firm in Aldgate, Clerkenwell, and Shoreditch, an extra 8 sq ft. of floor space was leased to a new tech or media company.

And whilst larger tech and media firms continue to utilise large office spaces, for example Google’s 863,000 sq ft. office in King’s Cross is rumoured to include a swimming pool and airship docking station, smaller firms, along with start-ups, who make up 98 per cent of tech companies, are demanding less space on an average deal basis, but are demanding more from that space. The rise of small tech businesses has led to more real estate activity but has resulted in an office footprint that is on average 44 per cent smaller in 2015 than it was in 2013. The same is true of media companies, with the average office footprint falling by 22 per cent within the same period.

Rents paid by tech and media companies rose by £9.40 per sq ft. between 2013 and 2015, equivalent to a 21 per cent increase. As companies battle these rising rents, tech firms are eager to drive efficiency across real estate portfolios. Cost reduction is not typically the primary driver of co-working; nevertheless, it can create an opportunity for more efficient utilisation of space, helping companies to optimise costs without compromising on the quality of the workspace.

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