FLEXIBLE WORKSPACES TO CONTRIBUTE US$254 BILLION TO LOCAL ECONOMIES IN THE NEXT DECADE

The increasing migration of flexible office space and co-working locations to areas outside of major metropolitan cities globally is creating a ‘flex economy’ that could contribute more than US$254 billion to local economies in the next decade, according to the first comprehensive socio-economic study of second-city and suburban workspaces. It revealed that on average 121 new jobs are created in communities that contain a flexible workspace, with an extra US$9.63 million going directly into the local economy.

The analysis, commissioned by Regus and conducted by independent economists, studied 19 key countries to delve into the economic and social impact of flexible workspaces in secondary and tertiary cities and suburban areas both now and through to 2029.

This rise in local working is being largely driven by big companies adopting flexible working policies; moving away from relying on a single, central HQ and increasingly basing employees outside of the major metropolitan hubs in flex spaces. Most are doing so to improve employee wellbeing by allowing their people to work closer to home, and also to save money and boost productivity.

An individual flexible workspace or coworking centre in a suburban location can benefit the local economy in numerous ways:

Jobs creation and the ‘sandwich economy’
Across the 19 countries analysed, the average individual workspace sustains 218 jobs. This includes temporary jobs created during the fitting-out stage of the office space, permanent jobs to run the office, including reception, maintenance, cleaning etc., plus the jobs associated with the occupancy of the workspace.

In some countries, office spaces host more jobs due to a variance in their average size, as well as local regulations and cultural factor. Japan sees the most jobs hosted from a single centre at 274. In China, a new workspace would sustain 227 jobs.

The research also reveals that on average, 121 net additional jobs (93 in China) would be created in the local economy for each individual centre. When businesses set up in suburban locations, they bring with them local goods and services, and employees who will spend in the local area, creating a ‘sandwich economy.’

Economic impact
In addition to direct job creation, flexible workspaces benefit the local area through an uplift in Gross Value Added (GVA), the measure of the value of goods and services produced in an area. The study found that an average flexible workspace will generate US$16.47 million GVA each year, of which US$9.63 million will go directly into the local economy. This is in part explained by the sandwich economy, but also created by improved career and earning prospects for residents and companies within the centre doing more business locally.

In China, businesses in suburban areas is estimated to increase GVA by CNY55.16 million (US$7.91 million) per annum, whereby CNY22.45 million (US$3.22 million) will go into the local economy.

For the greater good
Local office space has been found to benefit workers and local regions in other, societal ways. This includes reducing the time spent commuting, with access to a local office space expected to save 7,416 hours per year for workers. It is estimated that a total of 9,208 hours per year will be saved in China, of which it is assumed nearly half of it (4,604 hours) would be used for personal purposes. This has wider benefits as a shorter commute has been shown to reduce stress levels, which can increase staff morale and resilience, as well as mental well-being. It also provides working opportunities to people who might otherwise be unable to travel to an office, including disabled people, as well as those with caring responsibilities.

The next 10 years
Regus’ Suburban Economic Study also looked at the estimated potential of each market to host a larger, national portfolio of local flexible workspaces. It forecast potential changes over the next decade, reflecting expected trends in workforce demography, technological change and changes in business practices.

This additional analysis predicts that, if current trends towards regional flexible working continues, these communities could see more than three million jobs created by 2029. That is the equivalent to a city the size of Buenos Aires. The forecast also predicts that US$254 billion GVA will be added to local economies, enough to build 360 state-of-the-art hospitals[1].

For China, 2029 could see a total of over 1.72 million people working at local flexible workspaces, providing net additional employment opportunities for local residents amounting to over 710,000 jobs. The annual value produced by businesses accommodated in local flexible workspaces and their employees would be expected to be worth CNY 428 billion per annum, of which over CNY 167 billion would be retained by local economies.

Steve Lucas of Development Economics, and report author, says, “This study reveals a shift in jobs and capital-growth moving outside of city centres, where it has been focused for the last few decades, into suburban locations. This can benefit businesses and people, from improving productivity and innovation, to reducing commuting time, which leads to improved health and wellbeing.”

Mark Dixon, CEO for Regus’ parent company IWG, says: “When people commute into major cities their wallets commute with them. Working locally keeps that spending power closer to home. What this study shows is that providing more opportunities for people to work closer to home can have a tremendous effect, not just on them, but on their local area too. Businesses also recognise the benefits and we are seeing increasing demand from companies of all sizes for flexible space in smaller cities and towns. Larger businesses are opting for a ‘hub and spoke’ real estate model. At the same time, smaller enterprises want to cluster and collaborate, and so choose flexible workspaces to be near other businesses.

“We already have hundreds of centres in these types of locations, some of which have populations as little as ten thousand people and we plan to open many more in the near future as this trend continues. Our vision is that, in the near future, there will be a professional workspace available on every corner.”

To download the full report, please visit https://www.regus.com/suburban-economic-survey.

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[1] Based on the cost to build Queen Elizabeth Hospital Birmingham (QEHB) in the UK, which cost £545 million and opened in 2010.

[ENDS]

RELEASE NOTES

• The Regus study analysed the socio-economic impact of flexible working in 19 countries: Australia, Austria, Belgium, Brazil, Canada, China, France, Germany, India, Italy, Japan, Netherlands, New Zealand, the Philippines, South Africa, Spain, Switzerland, the United Kingdom and the United States.

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