The state of the serviced offices industry
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The serviced offices market is a business sector that has enjoyed substantial growth within a 15-year period. From humble origins at the dawn of the digital age, the sector now generates over $6 billion annually and consists of over 80 million sq ft of office space, all situated in some of the most important business centres across the globe. In this post, we examine the current state of the serviced office market in 2012.
The positive effects of recession
Despite being in the midst of a global recession, the serviced offices sector has managed to remain financially buoyant. Annually, the market is growing at around 10 per cent, partly driven by a reduction in leasing rates of around 10 per cent.
Indeed, one of the peculiarities of being in a recession for serviced office providers is that they are able to expand their operations by purchasing or leasing extra office space, often at discount rates. This has enabled serviced office providers to expand their portfolio markedly, allowing them to achieve sustained economic growth, even in these tougher financial times.
There is no dominant market leader
Another aspect of the market that contributes to its current healthy status is the fact that the market is still highly competitive. Global Serviced Office Review 2011 revealed that there was only one large market leader but that their overall market share was just 20 per cent.
This means that new companies and investors are being attracted into the serviced offices market, as the conditions are right for substantial growth in what is an industry that is still very much in its infancy. Currently, there are around 2,400 providers, operating approximately 5,500 serviced office centres around the globe.
The UK leads the way
In terms of serviced offices, London is one of key players in the market. The UK makes up over one third of the global market for serviced offices; London alone has an eight per cent share of the global market – if you combine the serviced office markets for New York, Paris, Hong Kong, Sydney and Tokyo, then that market is the same size as London’s.
The UK market also leads the way in other areas too, the average workstation rate in Paris for example is $1,575, whereas in London it is $832 and in Sheffield just $296, making UK serviced offices among the most cost effective in the world.
The global perspective
It is clear is that the serviced office market in the rest of the world is lagging a little behind the UK model, although in recent years markets have been improving very quickly. Interestingly, there is a projected demand for serviced offices in many emerging markets around the globe.
All the above factors lead to the conclusion that the serviced office market is not just buoyant in 2012, but will continue to be so for many years to come.
Servcorp offers the world’s finest serviced and virtual office solutions. Founded in Sydney in 1978, Servcorp now operates an international network of prime city locations including our serviced office space in London.