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In Europe, the suburbs are making a comeback, and it all started before anyone had even heard of Covid-19. In the UK, pre-pandemic, there was evidence of people leaving London in growing numbers. Data from the ONS showed that 304,500 people moved out of the capital in the 12 months to June 2018 – the zenith of a steadily rising curve since 2013 – and again the biggest recipients were smaller towns outside the city.
This movement – it’s been called the Millennial Exodus – appears to have been sharply accelerated by the pandemic, and now looks like the pattern for years to come.
And it has significant implications for employers: thanks to Covid-19 workers are deciding they not only want to live outside city centres, but to work there, too. Why suffer the daily grind of a commute on crowded trains or sitting in traffic jams if you could take a much shorter hop, possibly even walking or cycling, to an office close to where you live?
The best of both worlds
With tens of millions of people worldwide working from home during the last six months, the corporate office model has been shattered. Many are likely to continue working from home some of the time after the pandemic has passed, but a new paradigm is emerging that combines the best of both worlds. Called the hub-and-spoke model, it involves a greatly reduced central corporate office connected to smaller more flexible workspaces located close to where employees actually live. And the key beneficiary in that formula is proving to be the suburbs.
Mark Dixon, IWG CEO, says that in the UK we can expect “a pivot into the suburbs and the rings round London, Birmingham and Manchester”. Providers of serviced offices such as IWG have already seen direct evidence of the trend.
A recent report into the UK flex market by The Instant Group notes: “What we are seeing is a rise in demand within the smaller, regional markets, with the highest demand growth of all being within tertiary markets.” As a result, the report’s authors go on to suggest “we can all be cautiously optimistic for the future of the [flexspace] sector”.
A survey by recruiter Totaljobs, published in July this year, reinforced this view. It suggested that 26% of all Londoners would like to work outside London post-lockdown, adding that 38% are reconsidering where they live as a result of the pandemic.
Meanwhile in Italy, where IWG has 70 centres, the story is the same. “We’ve definitely seen customer demand move from the city centre to the outskirts across the country,” says Mauro Mordini, IWG Country Manager, Italy and Malta. “Our suburban centres are close to residential areas, meaning workers can reach them more easily, without the need for public transport and contact with crowds.”
Interestingly, he adds, a high number of people who had previously moved to large cities from other regions have been able to return to their places of origin to work remotely. “The pandemic has confirmed that working remotely is possible,” he explains.
He predicts that most companies will consider flexspace in the next few years “both to give the workforce what they want (professional office space close to where they live), and to create a more dynamic structure at more advantageous costs”.
Europe leading the way
At a European level, data from a recent survey by Workthere shows that demand for suburban flexible office space is now the top source of demand, as employers look to accommodate their workers closer to home.
Of the flexible office providers surveyed, 28% said they were seeing highest demand from companies looking at suburban flexible office space, with Ireland (56%) and Germany (33%) leading the way.
The report’s authors suggest this trend is compounded by the fact that 24% of providers surveyed across Europe have seen companies downsizing their lease (the figure is especially high in Spain where providers are seeing 40% of companies looking to downsize).
This is coupled with the fact that 10% of providers are seeing demand for space from corporates – this figure is slightly higher in the UK and Ireland (11% respectively) suggesting a small headstart in the trend.
Welcome to suburbia
The suburbs look set to be the main winner because they still offer that connection to the cities and to the amenities that people have come to expect.
A report by Savills shows that 61% of European respondents would not add more than 15 minutes on to their commute each way for their ideal workplace, with 16% of these not willing to add on any time at all to their commute.
It seems that suburbia, whether it be commuter towns or the wide spaces beyond city limits, is where most office workers live. And in future, as the world resets and re-appraises what’s important, it may be where they work, too.
Find out how Regus’ suburban centres can help your business adapt to the new world of work