Occupier demands are changing fast and we are delivering space that meets their needs. During the year we have significantly extended our commitment to flexible office space, expanding our co-working partnerships at City Place House, EC2 and committing to our new flex+ product that enhances our existing flex offering.
The right space at the right time
We know what occupiers want and we are evolving the way we provide space to meet that demand.
Occupational demand is continually evolving and we think that the requirements of our occupiers have structurally changed. One element of this is the popularity of serviced offices, which continues to grow.
However, as start-ups graduate into scale-ups, they are being hampered by the physical and cultural constraints of a typical serviced office. As they grow, many are looking for the characteristics of the serviced office in a space they can call their own. We believe that this demand will soon require most sub 10,000 sq ft space to be fitted out, providing a stepping-stone between serviced offices and traditional Cat A space.
Our portfolio is well suited to this product. With more than 75% of our floors sub 10,000 sq ft, we do not have to split floors and require customers to share facilities, and so our operational model does not need to drastically change. Crucially, the Flex product is accretive, creating attractive premia to traditional NPV, headline and net effective rents. The average length of lease for this space is around three years and, to date, it has typically taken less than a month to lease, which is quicker than traditional lettings, and therefore, less risky.
We think this new demand dynamic is here to stay. Greater expectations from occupiers has led, and will continue to require, more fitted and managed space. Accordingly, last year we launched our two flexible offerings, revenue share partnerships and Flex space. In the coming months we will extend our offering with our new Flex+ product which overlays service provision onto our already successful Flex offer. Flexible space currently accounts for 11% of our office portfolio and we are currently appraising a further 152,200 sq ft in the existing portfolio as well as actively targeting investment opportunities that lend themselves to our flexible space products.
