Co-working and flexible office providers have for the first time surpassed banks and technology companies as the largest source of demand for central London offices.
Hipster favourites including WeWork Cos. and The Office Group, acquired last month by Blackstone Group LP, leased a record 884,000 square feet (82,000 square meters) of workspace in the six months through June, according to data compiled by Cushman & Wakefield Inc. That’s the equivalent of 18.3 per cent of all the space leased in the period and surpasses the volume the firms agreed to occupy last year.
Growing demand for flexibility has resulted in a surge in demand for short-term leases as occupiers opt for a “wait-and-see” approach before making a long-term commitment to space. That’s encouraging firms including The Carlyle Group LP and Blackstone to buy short-lease landlords as they seek to cater to startup companies and customers who need additional space for specific projects.
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