How Channel 4's arrival in Leeds could support a co-working boom

Channel 4’s arrival in Leeds could help to fuel a co-working boom as the traditional workplace undergoes a huge transformation. By Greg Wright

When Channel 4 moves its headquarters to Leeds, it is inevitable that a host of nimble media companies will start to cluster around it.

Some of these will be tiny operations that may require little more than a desk, at least in their early stages. They will be hungry for co-working space so they can swap ideas and enjoy the invigorating thrill of being surrounded by other dynamic business. Co-working – an opportunity to work within a larger open-plan office occupied by a range of businesses – has grown in popularity in recent years as the world of work undergoes revolutionary changes.

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Jeff Pearey, the lead director for real estate services firm JLL in Yorkshire and the North East, has a ringside seat on the changing face of work space.

Alex Duckett.

“Co-working allows employees from different organisations to mix with staff from others. There can be clustering of like-minded firms who can collaborate and share ideas,’’ says Mr Pearey.

“For example, the interest generated following Channel 4’s announcement that it will be moving to Leeds could lead to a clustering of media and tech firms who may not want to commit to longer-term leases of office suites but prefer a looser, more flexible arrangement.

“Such business might then, in time, commit to longer-term leases but still retain an element of flexible – or flex – space. Serviced office operators are now setting up their businesses on the basis that they will grow with their occupier clients and permit ongoing flexibility; the key is the occupier drives these decisions.

“Occupiers of flex space are typically committed for shorter periods, so if they need to grow, or indeed shrink, they can take positive action more quickly than with a standard lease.

Alex Duckett.

“The future of work is clearly being redefined by flexible workspace. It’s disrupting how businesses work, plan for and occupy space. A more liquid and contingent workforce is also accelerating this change.”

Alex Duckett, the managing director of Leeds-based serviced office provider Gilbanks, also has his finger on the pulse of the region’s office market. The property company has taken 20,000 sq ft of prime office space in Leeds at One Park Row, where Gilbanks has created what it describes as an “aspirational, flexible and contemporary working environment for expanding businesses wishing to focus on productivity”.

Mr Duckett says: “The historic perception is that short-term office contracts were for companies or people that couldn’t afford or were not established enough to take a long-term, full traditional lease. It’s a belief that has changed.”

Today, growing numbers of firms have at least a proportion of their office space on flexible terms.

“The trend follows the automotive and housing market where the rise of leasing or renting now far outstrips the amount of outright ownership,” says Mr Duckett.

“This is prevalent across the rest of the modern world. The most cost-effective and beneficial way to occupy office space is on a flexible contract. Work space creation is also now recognised as a true skill-set, which, when used correctly, brings significant benefits in attracting, retaining and indeed maximising the productivity of employees. Instead of just asking ‘should we have an office?’, the question is now followed by ‘what type?’.

He adds: “I believe we will see more niche styles of operations looking to cater to specific industries in the future. Thirty years ago, single restaurants often served different styles of food on one menu, but now there are very specific offerings, and this is where offices will likely go.”

Perhaps the biggest advantage of co-working space is that it enables freelances and established corporates to work in a hub with like-minded people.

Mr Duckett says: “It creates a vibrancy that often increases productivity. Flexible leases allow companies to expand or shrink the number of desks they need to ensure their office doesn’t become a brake on growth. Businesses pay only for the space they need in a serviced office. It comes with desks, IT and all operational facilities which mean tenants can simply plug and play. It can free up cash to facilitate other routes of expansion.

“There are a number of economic trends that have supported the growth of co-working, including the pace of technological change.

“Business happens more quickly. Companies grow and contract faster than ever before, and the flexibility of premises is critical. How can you possibly know where your business will be in 10 years’ time?

“It is easier to do business globally, but with that comes the importance of a local presence. Taking a serviced office limits risk with all of the upsides of having premises.

“The UK has the largest serviced office market in the world and co-working is also rapidly expanding. According to industry research, both the UK and US are experiencing double-digit growth in the flexible office market.

“Several factors are driving the growth in flexible office space. Large corporates are adopting more flexible working practices and looking at how they can meet their property needs more creatively.

“On the other end of the scale, the number of self-employed workers has risen since 2001 to now account for around 15 per cent of the working population. The number of self-employed workers aged 65 and above has nearly tripled over that period.”

The digital sector around Leeds has the fastest rate of growth in the North of England. These types of businesses are well suited to flexible offices and understand the many benefits that they bring, according to Mr Duckett.

“Yorkshire was quick to embrace new ways of working, but it followed global hubs like New York and London. Perhaps it’s a Tyke trait to look before we leap,” he says.

“We set out to create a benchmark for what a productive working environment should offer. And beyond a great work space, we worked hard to create a new and thriving business community in the centre of Leeds. We are already seeing companies doing business with each other.”

According to Mr Pearey, today’s companies aim to become more agile because their workforce is more mobile.

“New generations entering the workforce also have different expectations of their working environment,’’ says Mr Pearey.

“Under-35s are more mobile inside the office, more likely to work from a range of different locations and keener to embrace innovative work spaces.

“Many office occupiers have a different approach to how they now configure their workplaces – there’s more of a focus on breakout space and informal meeting areas to enable better collaboration. Desk-sharing and hot-desking has become more prevalent. It is part of this shift away from fixed workstations that has led businesses to contemplate the virtues of flex space, and co-working is a part of this.”

He adds: “Historically, co-working used to be the preserve of smaller companies that sought flex space, but now much larger corporate businesses are suggesting that a percentage of the overall space they occupy is delivered in a more flexible working arrangement. This has led to an influx of new operators. In Leeds, flex space only accounts for less than 4 per cent of the total office stock in the city but in the next five years we anticipate it will effectively double in scale.

“The future of work is clearly being redefined by flexible workspace. It’s disrupting how businesses work, plan for and occupy space. A more liquid and contingent workforce is also accelerating this change.”

Apart from the growing popularity of co-working, Jeff Pearey, the lead director for real estate services firm JLL in Yorkshire and the North East, has also seen a shift to employers being more flexible about homeworking.

“Combine this trend where certain businesses might also have 25 per cent of their staff at work off-site then it is quite possible that businesses could easily adapt to needing just 70-80 per cent of their office space on a traditional lease and the balance could conceivably be ‘flex space’,” he says.

“When some of their more transient workers do visit the office, they are just as happy occupying touchdown space as opposed to having possession of traditional desks.”

But are there any downsides to the growth of co-working?

“Although more companies are considering or trialing it, it’s far from being a one-size-fits-all solution and won’t be the right move for every business, says Mr Pearey.

“Price can also be a factor if an organisation begins to require more and more space on flexible terms – it can become expensive. Price is the trade-off an operator or landlord requires to replace the longer-term security.

“Businesses with a need for a lot of security or storing sensitive information will also not want to share a cloud-based IT system and would want their own servers and IT security measures. A broader degree of permanence is required.”