The shift to remote and hybrid work is now embedded as a key feature in the modern world of work. For many companies, it offers greater productivity and makes it easier to recruit the best staff who are demanding greater flexibility in their working lives.

However, the rise of more flexible working patterns has also been blamed for the decline of the traditional office.

The argument goes that employees who are demanding to work from home at least some of the time are forcing companies to close their offices. This is supposedly having a negative effect on town and city centres, and also on office buildings themselves which are sitting emptier than before.

Indeed, figures from JLL reported by the BBC state that: “48% of clients in major markets, including the UK, Germany and France are seeking to decrease their footprints in the next three to five years as a result.”

Is it that simple?

But is it really that simple? While remote and hybrid work is a real trend, it is likely that the state of the economy is a much more significant factor in why firms are choosing newer, more flexible office spaces.

Interest rates are higher than they have been for a long time despite the Bank of England recently lowering the base rate to 5%. That makes borrowing more expensive and means that businesses have less cash on hand.

At the same time, the rate of economic growth in the UK has slowed for the second consecutive month in September 2024 according to data from S&P Global. With the British Chamber of Commerce forecasting subdued growth in the months ahead, it makes sense that businesses may be looking at where they can reduce cost over the short- and medium-term.

In this climate, it is more likely that companies are shifting to smaller, more flexible spaces because it makes more economic sense. Choosing a flexible or managed office space to rent allows businesses to save money and also give staff what they need.

Additionally, higher interest rates mean higher rents and higher materials costs. That makes flexible spaces which are already fitted out more attractive to businesses as it cuts out a major office cost. The higher materials cost also makes landlords more nervous about providing new spaces which need a fit out, again reducing the avaiability of more traditional office spaces.

Flexible workspaces can save you money

Take for example the technology, media and telecom (TMT) sector which in the last few years has been responsible for between 40-45% of all Manchester’s office take up. Now that interest rates have risen it means money is more expensive, which impacts the office sector. 

So what can tech companies do to mitigate rising costs? The first step is to understand the future of work, honestly assess what their staff need and what that means for their office space.

For tech companies this can mean providing:

·      A flexible working timetable

·      Diverse and inclusive spaces

·      Collaboration areas and events

·      Building and local amenities (like a gym, restaurants, digital connectivity, transport links, etc.)

·      A tech environment such as a dedicated accelerator space

…and more.

Once you know that, you can find an office space which suits your team, their needs and how a scaling company works perfectly. Finding a space that is fit for purpose and taking only as many desks as you need (with the option for more in the future) is a simple way to make a big financial saving in a tough economy.

Doteis a great example of a tech company which took all of the above into account when searching for an office. By doing so, they found a space which is perfect for the staff and company growth plans.

Flexible office space is such a good economic prospect that even big corporate firms are investigating the money saving potential on offer. For example, a flexible workspace can help limit your liabilities under IFRS 16.

With that in mind, it seems backwards to blame the decline of ‘traditional’ offices solely on people wanting to work from home.

Companies are adapting to economic conditions

The reality is that in a tougher economy, companies need to adapt and change to continue growing. One of the biggest financial savings available can come from moving to a flexible workspace with friendlier rental terms.

The available numbers back this up, with the take-up of flexible office space in the UK more than tripling in H1 2024, according to BE News.

Looking ahead, the IFA reports that 54% of all office space is expected to be flexible by the end of the decade, and over half of landlords believe that they will need to refit existing spaces to meet client demands.

Thrive with flexible workspace

So to say the office is dying is not quite accurate. Likewise, to blame hybrid working and work from home for that decline also isn’t quite right.

Instead, it looks like flexible workspaces actually offer businesses an opportunity to thrive in a tough economic climate. Done right, they can even be a way to persuade staff to spend more time in the office than they otherwise would.  

In the middle of Manchester’s flexible workspace boom, the new breed of flexible office space to rent provides a way for businesses to reduce outgoings and become more efficient. At the same time, they can find an environment that motivates employees and increases productivity.

Want to learn moreabout the benefits flexible workspace can offer your business and get ahead in a tough economic climate? Get in touch with our team today for a consultation chat.

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