How flexible are office leases in Shoreditch in 2015? There is no doubt about it one of the biggest challenges facing occupiers in the Shoreditch office market is finding flexible office space. Whether you are startup (funded or otherwise), a small business (zero to ten staff) or a medium business (ten to thirty staff), aside from cost, flexibility is often the single most important factor in their decision making process for a new office in Shoreditch. Despite the continued efforts, campaigning, and lobbying from the property team at Tech City UK, available flexible office stock in Shoreditch remains in short supply. For this reason we have seen the rise of co-working and serviced office space over the last 18 months and they are playing an integral role to solving the flexibility crisis in Shoreditch.
However, despite the fact that these landlords are very often providing plug and play purpose built / designed creative space with valued amenities such as break out areas, meeting rooms, roof terraces and event space – the actual physical space that they are offering their clients for the prices they are charging is leaving many occupiers feeling unsatisfied and in a state of limbo because the alternative of a more conventional office lease in Shoreditch, solves the lack of physical space by generally offering occupiers more than double the physical space that they have in say a serviced office for the money they are spending, but frustratingly they are only available on 5 year leases with commonly 3 year lease breaks being quoted, failing to offer occupiers the flexibility that their fast growing business demands.
In practice what we saw in 2014 and what will be likely to continue in 2015, is businesses with 10 or less staff will occupy co-working hubs and serviced offices on flexible terms and when their occupational needs demand more physical space to the point whereby their space sacrifice is no longer palatable, and their cash reserves are strong enough to secure a traditional lease because of the significant capex needed (for big rent deposits, fit out, furniture, IT infrastructure, connectivity, agency fees, legal fees ect…), then they will do so with the knowledge that there are flexibility parachutes available when you sign a long term lease to limit your liability. For example you have 25 staff occupying 2,000 sqft on a 5 year lease with a 3 year break and 12 months into the lease you are ready to higher 10 more staff in the near future and you need a larger space, more in the realm of 3,000 sqft. With the demand in Shoreditch remaining buoyant we saw occupiers assign and sub-let their leases / liability with relative ease to give their business the freedom to relocate and exit from a lease as and when they needed to. Of course we are in a boom market right now and this will not always be the case, but it is fair to say that this trend and booming market is looking likely to continue in 2015.
If you are in the market for a flexible office space in 2015 then we would love to help you with your search. Please email [email protected] for immediate assistance.