The rise of the part-time office

In the rapidly evolving landscape of flexible working, part-time offices are emerging as a transformative trend.

Part-time offices are a new concept whereby companies can rent spaces for one to three days a week. Sometimes this can lead to one company occupying two days a week and another company occupying the same space for three days a week.

This alternative form of occupation has the potential to top up occupancy rates and generate office market growth. With 44% of UK businesses adopting a hybrid working model according to The Flex Index, there is an opportunity for part-time offices to become a mainstay for the office sector.

While attractive to start-ups and early-stage growth companies with entrenched hybrid working and less cash to spend on office rent, part-time offices are increasingly appealing to larger-scale businesses taking up entire floors on a part-time basis. Growing take-up is also coming from companies who were previously fully remote, representing market growth for the office sector and expanding revenue potential.

This new trend will naturally bring new considerations to mind for landlords seeking to incorporate part-time offices into their portfolio to harness growing demand.

Growing demand

According to flexible workspace platform Hubble, part-time offices are experiencing an unprecedented surge in demand. Notably, 25% of Hubble’s new customers are contemplating part-time arrangements, indicating a growing interest in this adaptable model. Hubble receives approximately 120 inquiries a week concerning part-time offices, underscoring the growing demand.

The myth of ‘cannibalisation’

However, some landlords remain hesitant about incorporating part-time offices into their portfolios. A common concern is that part-time offices might cannibalise their existing portfolios. However, with average occupancy rates for flexible workspace fluctuating between 80% to 85%, part-time offices offer the potential to fill this gap and generate revenue from currently vacant space.

With most part-time office agreements operating on a monthly rolling basis, the deals offer a flexible short-term solution to empty space. Furthermore, the evidence suggests that part-time office occupiers are amenable to moving between locations – 85% of Hubble customers sustain their commitment beyond six months. The profit-making potential via ancillary revenue streams for landlords is also often overlooked. Higher footfall and occupancy of buildings inevitably increases revenues from on-site meeting rooms and cafés.

Part-time offices are also proving to be a boon for specialist serviced office operators as around 25% of their customers have seamlessly requested additional days, upsized their spaces or even moved into full-time arrangements. This not only bolsters revenue but also highlights the potential to foster sustainable growth within portfolios. 

Considerations for landlords

When preparing a part-time office, landlords need to ensure that an all-inclusive package is provided, including high-quality broadband, furniture and natural light.  Some landlords might not be set up to provide such an all-inclusive package and not all buildings are suited to such arrangements. It is often larger buildings with smaller offices that are best suited to these arrangements.

Landlords might also be concerned about potential disputes arising between the occupiers where the office is shared but on different days, i.e. if it is not left in a suitable condition. Having separate licence agreements for each occupier does position the landlord as arbiter of any disagreements, but there are ways of ensuring disputes are avoided.

Another important consideration for landlords is if the building is financed by lenders. In this situation, it is important for landlords to obtain consent from the lenders to operate part-time occupancy arrangements within the building. This step is a key consideration to ensure compliance and smooth operation of part-time arrangements.

The emergence of part-time offices represents a strategic alignment with the evolving needs of the modern workforce. Landlords recognise this shift and will need to assess whether part-time offices have the potential to drive increased revenue and customer retention for them. As the market continues to evolve, those adapting to this new way of working stand to gain the most, actively shaping the future landscape of flexible working.

This article was first published in BENews in July 2024