Flex and flexibility: how London became the Silicon Valley of flex

COMMENT: It’s no secret that industries often cluster in certain markets: tech in Silicon Valley, microchips in Taiwan, pharma in Basel, wine in Bordeaux. Those clusters can emerge unexpectedly (who could have foreseen video games in Dundee?) but once they take hold, they can become the global centre for a sector. That exact phenomenon has happened with flexible offices in London. The capital has become the global centre of the flex industry, despite, strangely, the fact that few of the global providers are headquartered there. It’s unexpected, but undeniable. First, let me acknowledge that I run a global flex provider, Industrious, that is based in New York, so I admit London’s dominance begrudgingly, but with the utmost respect.  So why is it that all roads in flex lead to London? London, for various historical reasons, had more supply of flex than anywhere else when Covid hit. In 2019, 35% of office deals in London involved operators of flex workspace. This was driven by the fact that local UK providers had scaled aggressively and effectively – TOG/Fora most notably – but had chosen to concentrate their efforts in their home market. London operators doubled down on London, while their competitors around the world flew their home coop.  While Singaporean operators grew in Hong Kong, Israeli operators grew in Germany, and WeWork tried to grow just about everywhere, the British providers focused much of their growth right at home in London. TOG/Fora is probably top five in the entire industry in terms of revenue, and it’s almost all from a single city: London.  WeWork compounded this by chasing London more than anywhere else on earth. In its heyday, revenue growth was the one metric to rule them all for that business. What market had the highest desk rates? London. So, what market did it focus its growth in? London. Then Covid changed everything about commercial office space. While traditional office spaces are still trying to find their footing, this current era is when things get really interesting in flex. More distributed ways of working, more uncertainty, and a growing taste for outsourcing has stimulated demand for flex just about everywhere, but counterintuitively, typical supply-demand dynamics seem to have been turned on their head.  Markets with relatively low supply of flex (like Tokyo) have seen moderate increases in demand, but markets with a large existing flex office supply, most notably London, have also seen the greatest increases in demand. What looks like oversupply might actually be stimulating demand. According to recent data, occupancy rates for flexible workspaces in London have risen significantly, reaching 83% in early 2024, up from 81% in late 2023. This is because customers know they can find high-quality flex space exactly where they want to be, which in turn can deliver a great employee experience. As a result, a global fortune 500 might choose a flex operator in London, while begrudgingly signing a more traditional lease in Paris or Berlin. That particular dynamic has created a virtuous cycle for London that makes it the most strategic city in the world for flex operators. On the global stage, there are a few key players in the flex space industry, and we are all vying for global businesses to choose us as their preferred provider. Because London has the largest supply of high-quality flex space, it is often the first city where global occupiers experiment with flexible office solutions. This makes London a critical battleground for flex operators, giving us the first opportunity to win over these potential customers.  The inside scoop is simple: we want these companies’ London business so they can eventually be persuaded they should also be working with us in Munich or Mexico City. Think of it like securing the most coveted address in town. London’s high-quality flex spaces have become the must-have location for global companies looking to make their mark in the flexible workspace sector. The prestige attracts more companies, which in turn encourages flex operators to continually up their game, creating a virtuous cycle of excellence. In simpler terms, for a flex operator like myself from New York, London is where you need to be to attract the world’s biggest clients. With more top-tier flex space than anywhere else, companies often turn to London first when exploring flexible office solutions. This makes London strategically vital, pushing operators to invest heavily in creating exceptional spaces, which in turn strengthens the city’s position as the “Silicon Valley” of flex. And ultimately, it’s Londoners who benefit. Jamie Hodari is chief executive and co-founder of Industrious