Procurement · 1 June 2016

Will rising co-working prices force entrepreneurs back to coffee shops?

rising co-working prices
Buzzy coffee shops could be more conducive to concentration than expensive co-working spaces

New data from SpareOffice highlights sharply rising co-working prices in the UK, as everyone from one-person companies to big corporates embrace the trend.

The average co-working space in London costs almost £400 per month, while a desk in one of the UK’s cheapest cities will set an entrepreneur back £200, the research reveals.

It highlights a sharp increase in average UK co-working prices from the £168 per month calculated by Deskwanted in 2011 – and those who carried it out are confident the trend is set to continue.

“We believe that prices will continue to rise as more and more companies embrace the flexible arrangements and collaborative environment offered by co-working space providers,” said SpareOffice chief executive Joe Vallender.

“Indeed, we have seen an increase in investment by institutional investors, which see co-working spaces as an interesting investment opportunity given the relatively low yields offered elsewhere in the commercial real estate sector,” he added.

Recent moves to flexible working by big corporates have indicated that the the popularity of working across multiple locations is not limited to startups. The Telegraph Media Group announced plans to reduce space at its London headquarters in May 2016, with chief executive, Murdoch MacLennan, telling staff in an email: “Our office is never full and even on a very busy day a large number of desks are unused.

“With changes in the way we work, and hot-desking for some of those who need to be in the office, we will be able to reduce the size of our footprint. I believe that this will allow many of us to have a better work-life balance and I hope you will welcome this modern, employee-friendly approach that is so much in line with the changes in the media world.”

Another recent report from property consultancy CBRE suggested that financial services firms in the City of London are also getting in on the act in order to reduce real estate costs.

“As part of the consolidation process, financial occupiers are seeking to change desk utilisation from its current rate to as high as 85 per cent,” said CBRE London director Katherine Bain.

“Achieving this could make a significant difference to the bottom line, but to do so would require various intensification initiatives, including different people using the same desk at different points in the day. As well as cost saving this also promotes better collaboration which is as important to occupiers.”

A spate of growing and established firms have opened space in offices up to small business owners, with design company Accouter offering 14 spaces in head office in London’s Oxford Circus, and education agency Bright Young Things renting out spare desks close to Victoria Station.

But other startups have returned to what many entrepreneurs see as their natural habitat – the coffee shop. And academic research published in the Journal of Consumer Research in 2012 found that the level of noise in the buzzy spaces was could actually be more conducive to productivity.

“For individuals looking for creative solutions to daily problems, instead of burying oneself in a quiet room trying to figure out a solution, walking out of one’s comfort zone and getting into a relatively noisy environment (such as a café) may trigger the brain to think abstractly, and thus generate creative ideas,” the report’s authors wrote.

Struggling to decide on the best working space for your micro business? Check out this expert advice.

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ABOUT THE EXPERT

Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics – as well as running a tutoring company.

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