Companies all over London have been wincing at the repeated news of commercial property prices being on the up.
In April, it was reported in the Evening Standard that a deal by professional services firm Deloitte for a 270,000 square foot pre-let pushed the City lettings to 34 per cent ahead of the exact same time last year. High demand for space coupled with a shortage of it in areas like the West End has pushed vacancy rates down to around 2.3 per cent - reportedly not seen since 2002.
If that wasn’t bad enough, in June, Carter Jonas’s property review announced that rents look set to rise by an average of 13 per cent by 2017. Ouch.
But instead of sending CEOs and Directors shimmying nervously down corridors, turning off sections of strip lights and putting rations on toilet paper, another far more ingenious solution has been taking root in the offices of the UK’s capital city.
What’s the solution?
Office space is big business right now. There’s a high demand for a scarce product which has in turn birthed the successful rise of co-working, hot-desking and shared office space in London (opens in new tab). Large companies such as WeWork (opens in new tab), The Office Group (opens in new tab) and Avanta (opens in new tab) now specialise in sizeable spaces that can be rented out to entrepreneurs and small companies as the London startup community seek solutions to the problem of scarce, expensive office space.
Larger companies are cottoning on, realising that instead of being a hinderance, surplus office space could actually become an extremely welcome source of income. Surprisingly, according to research on office providers listing through Hubble (opens in new tab), London’s marketplace for office space, the price of a single desk space in London can be as much as a bedroom.
As many companies now give employees the option to work from home or work flexable hours, even more lonely square footage is left to nurture dusty monitors and empty coffee cups. This creates a huge opportunity for desk subletting.
So how much could you get for renting your spare desks?
If you have spare desks or space in your offices and aren't renting them out, you are definitely wasting a cash-generative asset. A single desk in Central London can be worth £450 a month or more on its own, and much higher if you have a separate room or floor (mezzanine levels are great) that will allow a company sharing with you to have their own space.
Even better, many companies want the benefits of simple monthly rolling agreements. This means you won’t be locking yourself into letting your desks out for a long period of time. This is great for agencies and production companies who may need the flexibility of more desks during peak times or for busy client projects, but are left with spare desks during the slower times of the year.
Research on a representative sample of over 400 office buildings in London found the following average desk prices in popular areas:
Desk space in Shoreditch is worth approximately £350 per month
Desk space in Soho is worth approximately £450 per month
Desk space in Mayfair is worth approximately £800 per month
You can also try this office space calculator (opens in new tab) to find out how much your spare desk space could be worth.
Who else is renting out office space?
Shared office space is a much more familiar concept now than it was a few years ago, with many companies recognising that there’s more than just financial benefits to housing entrepreneurs and fast-growing small businesses in house.
Around 42 per cent of the 700 office spaces on Hubble are shared office spaces (the rest are commercial office space or coworking providers) but there’s still demand for more.
As office rental prices have increased across the capital, demand for shared offices has shot up (searches for shared office space on Hubble were almost six times higher in October 2015 than the year before), with more and more companies recognising the benefits of sharing an office on a flexible basis rather than committing to a long lease.
Enterprises like accountants iHorizon (opens in new tab), Accouter (opens in new tab) and Hamilton Bradshaw (opens in new tab) have all opened their spare space for rent, alongside hundreds of others.
Any other benefits?
Most definitely. If you’re sharing your offices with a small startup or entrepreneurs, you’re bound to share information and pick up valuable insights, contacts and tips.
Many startups work with the latest technology when developing their businesses and whilst they can benefit from the skills and experience of being next to a well established company, larger businesses benefit from the fresh talent, insights and ideas startups bring with them.
You can even specify what kind of startups or entrepreneurs you’re looking for to fill your space. Slingshot Sponsorship (opens in new tab) in North London say in their listing: “We are looking for tenants who match us for youthfulness, innovation and are disruptors in their industry."
And there’s plenty of examples of instances of cross-company benefits between host companies and guests.
In 2014, London startup Maplist (opens in new tab) moved its growing team out of a cramped living room and into its first office space. It had found a few desks in a shared office with creative agency Creative & Commercial (opens in new tab), based in Camden Town.
As the company worked on developing its innovative mapping project, the Maplist team was making heavy use of the geospatial mapping capabilities of PostgreSQL. Creative & Commercial's technical team couldn't help overhearing the mapping-related conversations as the office buzzed with tech jargon. Chris, one of the developers, told us: "It's a real case of serendipity. I was curious about improving my knowledge of mapping tech at the time, and one day these three guys from Maplist started sharing our office. They were really experts in the mapping side of Postgres, and they taught me a lot through conversations in the office and helping me dabble with my own projects.
"After a few months I was really confident with it, and it turned out when I applied for my next job, a working knowledge of this stuff was essential for the role. Now I use this toolset every day, building and maintaining geospatial databases. This would never have happened without office sharing!"
If you’d like to find out about listing your office, you can list your space for free on portals such as this one on Hubble (opens in new tab). Share the office space love and see how your business could benefit!
Image source: Shutterstock/Monkey Business Images