^{Source: Savills Research}

■ Serviced office operators signed for 208,000 sq ft in Birmingham during 2017, accounting for 47% of the UK regional total (Graph 2). The most notable deal was Regus signing for 76,000 sq ft at The Lewis Building during the final quarter. Manchester represented 26% of the UK regional serviced office demand during 2017 as WeWork signed at No. 1 Spinningfields and One St Peter's Square for 56,000 sq ft and 44,000 sq ft respectively.

^{Source: Savills Research}

■ Given the nature of sub-leasing space to multiple tenants, serviced office deals are considerably larger. The average serviced office deal size in 2017 was 20,700 sq ft, 176% above the all sector average deal size of 7,500 sq ft (Figure 1).

^{Source: Savills Research}

■ Regus was the most active operator last year, signing for 127,000 sq ft (31% of the total) last year, whilst WeWork signed for 100,000 sq ft (24%, Graph 3).

^{Source: Savills Research}

The Hunt for Talent

■ From Savills What Workers Want survey, 18% of our sample office workers spend their work time within serviced offices in the UK.

■ Serviced office providers signed for a higher quality of space than the all sector average last year. 75% of space taken by serviced office operators last year was of Grade A standard, above the all sector average of 55%. High quality space has been key to attracting and retaining higher end occupiers from a range of business sectors.

■ It is no longer only the tech/creative businesses who are signing for serviced office space. Savills What Workers Want survey shows that 42% of sampled legal workers and 29% of financial services workers operate from serviced offices (Graph 4).

^{Source: Savills Research, What Workers Want}

■ Serviced offices have been particularly effective at attracting younger talent pools. 40% of workers in serviced office accommodation are aged between 18 and 34, whilst in traditional offices, only 29% of workers are in this age band (Graph 5). Serviced offices continue to attract younger workers because of creative fitouts and a higher provision of open, collaborative space (Graph 6).

^{Source: Savills Research, What Workers Want}

^{Source: Savills Research, What Workers Want}

What Next?

■ Given the letting success of larger operators, we expect serviced office providers to look outside Manchester and Birmingham to increase their regional footprint. With unprecedented levels of requirements, Savills forecast UK regional serviced office take-up to reach 500,000 sq ft during 2018.

■ Traditional offices must continue to reinvent themselves in order to remain attractive and compete with serviced offices. Landlords must also adapt as tenants demand increasingly flexible lease terms.

■ Freeholds are also targets, as according to Property Data, WeWork invested £670 million in central London offices in 2017. With regional office capital values remaining attractive compared to central London markets, we expect more serviced office operators to look to acquire freehold offices in the regional markets.