Start-ups and the London property market have shared one thing in common recently: disruption.
With WeWork becoming central London’s largest office space provider in 2018 and the flexible office space market experiencing a 10 per cent growth spurt in recent months as dozens of new providers enter the market, the choices available to start-ups looking for office space have never been more varied.
Throw into the mix an uncertain economic climate, increased start-up support in the UK regions, as well as a talent crisis and you see why now, more than ever, picking the right office as a start-up is crucial.
Trends in co-working and the wider business environment have moved the goalposts for start-ups looking for space.
For one thing, the increase in providers has led to competitive prices. International challengers to WeWork’s crown such as Knotel, Campfire and Mindspace have opened up spaces in London, whilst local challenger brands, like my own Runway East, have grown aggressively inside the capital and other regions.
And more supply on the market has meant desk space is getting cheaper in many instances, with some providers offering deals such as 50 per cent off for 24 months, and brokers being paid 100 per cent commission on the first 12 months revenue from their deals.
For canny start-ups focused solely on desk space, now is a good time to go bargain hunting.
Whilst co-working traditionally offered flexible contracts for companies of up to about 30 people, providers like Runway East, WeWork, Knotel and more are now offering spaces for teams of up to 100 or even 500 people on flexible terms.
Start-up founders at the helm of growing businesses now have the option to stay flexible for longer, and many are leaping at the opportunity. The emergence of scale-up spaces are alluring to start-ups because they allow them to put off the costs and risks of an in-flexible lease for longer, and enjoy the all-inclusive, no-hassle nature of co-working.
American co-working companies like Knotel are hopping on board as well and crossing the pond to open their offices in London – making long-term leases a ‘thing of the past’.
One trend to watch is co-working operators ‘curating’ their communities for certain types of companies. The benefit is that by exclusively hosting one type of company, better results will be produced in terms of collaboration and innovation.
Whether the space is specialised for start-ups, specialised for women-led businesses like recently launched Bloom’s, or tailored for the creative and music industries like the newly launched The Ministry, the trend towards ‘curated’ communities looks like it’s here to stay.
Meanwhile larger companies like WeWork and Regus have begun to launch start-up-specialised spaces in an attempt to keep up with the newer kids on the block.
It used to be a given that central London was the hub for all things tech – but that is swiftly changing.
There’s been a clear expansion of tech hot spots south of the river, including Croydon, hailed last year as the ‘Silicon Valley of South London’, and notably in the London Bridge and Southbank area.
What’s more, a considerable amount of founders are choosing not to come to London to start their businesses.
With more start-up support in the regions, London may lose out to cities like Bristol, especially as new graduates increasingly choose to set up shop in the big B (new nickname anyone?).
It’s safe to say that the start-up scene is thriving, expanding and changing. It’s up to landlords and providers to keep up with the needs of the tech scene, especially as founders increasingly crave flexibility as they scale.
The start-up scene is still in take-off mode – all we can do is join the flight.