How the pandemic has only strengthened this emerging sector.
2020 was a challenging year for anyone trying to operate a successful business, but especially for franchisees. With gyms, hotels, and fast-food chains closing during lockdowns, many traditional franchise industries felt the pinch of the pandemic and the importance of having a diversified franchise portfolio was clearer than ever.
But, while COVID-19 has impacted all types of businesses, flexible office space has an opportunity to adapt and even grow as a result of lockdown in 2021.
The pandemic has accelerated the shift to remote working and allowed businesses and workers alike the chance to experience the benefits of hybrid working. For employees, it has meant saving time and money on commuting into the office, and for businesses, it has opened up the potential savings of shifting away from central offices while keeping the workforce productive and happy.
This year already we’ve seen big businesses such as Standard Chartered adopt a more flexible model, signing a deal that allows its 95,000 employees to work from any of our 3,500 offices around the world.
But what does this shift mean for office space franchises, an emerging franchise sector which has traditionally been based in large cities? How is the industry likely to evolve in the coming year as a result of 2020’s turbulent events? Here’s my take on what we can expect in the year ahead.
Staying closer to home
With many businesses and employees reaping the rewards of flexible working during the pandemic, it’s already becoming clear that the traditional idea of commuting into a central HQ every day is dead.
According to our own IWG research released in September, six in 10 U.K. workers still want to work in an office for at least part of the week – but one closer to home, with 77 per cent saying that this is a must-have for their next job move.
Driven by this demand, we will see successful flexible offices grow in suburban commuter hotspots, closer to where employees live. In time, a flexible workspace in every town, city, and some villages will very much become the norm. At IWG this is a trend that we’ve already seen gather pace during the pandemic, having recently reported 20 to 30 per cent growth in our outer London and Cambridgeshire locations.
We’ve also seen a surge in demand for our centers in M25 commuter hotspots including Luton and Uxbridge, where the number of inquiries for flexible office space increased by 74 per cent compared to pre-pandemic levels. It’s a different story in central London though, where we’ve seen a 40 per cent drop in new sales.
The desire to work closer to home will have an impact on other franchise industries once they are able to reopen, such as gyms and restaurants, who will no longer be able to bank on the business of office workers in city centers. As a result, we can expect an increase in these types of businesses opening locations in the suburbs over the coming year, as they look to bounce back from the pandemic and grab a slice of this new customer base working from multiple locations throughout the week.
More demand for smaller spaces
With more people looking for a desk space close to home and lingering concerns about social distancing, the demand for smaller individual workspaces rather than larger open-plan work areas will continue to rise.
This trend played out in our sales last year when we observed a 19 per cent increase in interest for our one to two-person workspaces compared to pre-pandemic levels, and it is one that will be a key consideration for office space franchisees in the next year.
A new type of franchisee
The uncertainty caused by COVID-19 has meant that everyone, regardless of their profession or individual situation, has had to adapt their way of working in some way.
With many employees saving time that would otherwise be spent commuting into work, the pandemic has also provided an opportunity for people to reflect on their goals and aspirations for the future, maybe even encouraging them to start a side hustle or business they’ve never had the time to work on until now.
“While COVID-19 has impacted all types of businesses, flexible office space has an opportunity to adapt and even grow as a result of lockdown”
It goes without saying that the pandemic has and continues to cause a loss of confidence in the security of certain jobs and industries. I would be unsurprised to learn of more people making the leap towards becoming their own boss this year, potentially turning to franchising as a viable option.
Eggs in more than one basket
It isn’t just franchise newcomers we can expect to hop on the hybrid working trend this year. Established franchisees looking to diversify their portfolios and reduce risk by investing in previously unexplored industries could make flexible office space franchises more popular than ever in 2021.
There is currently a high level of unmet demand for flexible workspace in certain towns and suburbs across the country, which presents an untapped opportunity for potential investors, so long as they move at pace.
2020 was the catalyst for a huge long-lasting shift in how and where we live and work. Many ‘traditional’ franchise sectors such as fast food and hospitality have had to change their operations overnight, and challenges such as closures unfortunately aren’t going anywhere for the first part of 2021 at least.
The office franchise space has also quickly responded and is now tuned in to cater to the changing working practices that are here to stay.
While the industry will undoubtedly undergo a number of changes in 2021, the outlook for franchised office space looks positive, offering an attractive proposition for existing franchisees to diversify their portfolio and reduce risk, as well as for budding entrepreneurs who wish to start their own business under an established brand.
Julian Chambers is the head of franchise for Regus/International Workplace Group (IWG) and has experience spanning more than 25 years across multiple F&B brands.