17 June, 2020
Are we seeing the rise of fully fitted offices?
The last few months have earmarked significant and rapid changes to the design of the office, as well as to the dynamics of the office market. For starters, the enforcement of social distancing measures has triggered the de-densification of office spaces, as tightly packed offices become a thing of the past. In addition, the demand for large, and often underused office space, has started to drop as companies consider abandoning big head offices and continue to reassess their real estate portfolio. Importantly, and arguably expectedly, the demand for flexible space in London has languished during the last few months, with leasing down to three percent in Q1 2020 from 17 percent in 2019.
Yet, in spite of all these changes, demand for alternative office space continues to blossom during this period of uncertainty. Interestingly, BC&Co. are now seeing a gradual demand for fully fitted, Category B, traditional office space. It is likely that this trend has been catalysed by the material impacts of Covid-19 that have tightened purse strings, and in turn encouraged occupiers to cut back spending on office overheads.
It is worth noting that the trend towards the rise of fully fitted offices is supported by industry experts. For example Andrew Mercer, Office Sector Lead at Legal & General Investment Management, posited this school of thought when he presented his insights on how the office will look post-pandemic: “it might be about fitting out more spaces, such as furnished and work-ready spaces, to reduce the capital intensity occupiers need to put into leasing.”
Many argue that the unique point of attraction of flex office space is its fully fitted design. Although, some occupiers are on the fence about coworking space that proliferates hot-desking, as well as open-plan layouts, the appetite still exists for a space that provides all the essential amenities needed to streamline the return back to the office. Pointedly, the demand for fully fitted office space is now more likely to be desired within a traditional office setting.
We’ve noticed that traditional Landlords, specifically those focussed in Dalston and Hackney, have been heeding this trend. Many argue that furnishing properties over dropping the price of rents works in favour for tenants, as lowering the value of rent does not compensate for the initial cash layout tenants have to pay to fit-out their office space.
WHY SHOULD YOU CONSIDER FULLY FITTED OFFICE SPACE?
Fully fitted spaces, also known as Category B fit-outs, incorporate things that make a workspace functional and available at the point of use. This includes furniture, partitions, floor finishes and specialist facilities. In essence, they are workspaces that are thoughtfully designed and provide all the essentials needed to make an office workable and approachable.
Under normal non-Covid 19 circumstances, occupiers would be more likely to work with fit-out specialists to create a unique, tailored and branded space. However, during these extraordinary times, occupiers might find themselves cash-strapped and might prefer to opt for space that provides such amenities at perhaps a less personalised level.
The nascent trend for fully fitted space is tentatively gaining momentum amongst a diversity of businesses. In early June social media titans, Pinterest, announced that they were flexing up their real estate portfolio to include 40,000 sq ft of fully fitted office space in Dublin.
Whilst, companies try to adapt to a new normal for the office and take the time to readjust their assets, it is possible that we will see a burgeoning number of occupiers choose fully fitted workspace for its cost-efficiency and convenience.
Aylesbury Street is a fantastic fully fitted office in the heart of Clerkernwell!