FLEXIBLE WORKSPACE HAS BECOME MAINSTREAM AS IT CONTINUES TO OUTPERFORM TRADITIONAL RENTS IN LONDON
HEWN, the UK’s leading flexible workspace consultancy for property owners, unveils the second London Flexible Workspace Return Index
HEWN, the UK’s leading flexible workspace consultancy for property owners, has released the latest Flexible Workspace Return Index, revealing that higher-quality flexible workspace products continue to outperform traditional office rents across most London sub-markets.
The report analyses five-year performance trends across three grades of flexible workspace 5*, 3* and 1* comparing achievable desk rates and returns with traditional headline office rents.
The findings highlight a widening divide between product quality tiers, with 5* and 3* flexible workspace consistently outperforming traditional rents across most London markets.
By contrast, lower-grade 1* products have shown significantly greater volatility and, in several locations, have struggled to maintain returns comparable to conventional office rents.
“Last year was a tale of two halves in terms of performance.” Shares Will Kinnear, founder of HEWN, “This is the second year we’ve produced this report, and what it demonstrates on a year-by-year basis and across a five years’ timeline, that when done right flexible workspace products can consistently outperform – this year levels reaching over 200% of headline rent, even during periods of economic turbulence affecting the wider commercial real estate sector.”
HEWN’s index combines quarterly traditional office market data with flexible workspace desk-rate data compiled by Valve, technology costs from Office Ready Tech alongside proprietary operational cost data.
“Our data clearly demonstrates the value of flexible workspace. It is no longer a secondary option for landlords and asset managers, it is becoming a strategic advantage for office owners.” adds Kinnear.
Across the past five years, 5* and 3* products have consistently outperformed traditional office rents in almost every London sub-market. However, the gap between flexible workspace returns and headline rents narrowed slightly in several locations toward the end of 2025 as traditional rents continued to rise.
Notably, 5* product returns in Canary Wharf, West End and the City reached their highest levels in five years, underlining strong demand for high-quality flexible workspace.
West End
The West End remains the strongest performing flexible workspace market in London, delivering the highest desk rates and available returns.
Demand remains strong, supported by an evolving supply of high-quality workspace.
The 5* product recorded its highest desk rates in Q2 2025, generating returns of approximately 125% of prime headline rents. While returns softened slightly in the second half of the year, they remained above 2024 levels. The 3* segment showed a similar performance trend.
City
The City continued to exhibit strong demand and supply for both traditional and flexible workspace. Product quality continues to be the key differentiator between achievable flexible workspace returns and traditional office rents.
The 5* segment recorded the highest returns of the past five years, reaching almost 200% of traditional prime rents. Despite a softening to roughly 130% in Q4, continued growth is expected as high-quality space is delivered in prime assets. The 3* segment maintained solid performance, with gross returns of 135%–150% of traditional rents and net returns of 120%–130%.
Midtown
The Midtown flexible workspace market continued to expand in 2025 as new operators entered the area, yet increased supply had no adverse impact on desk rates or returns for higher quality products.
The 5* product consistently outperformed traditional office rents, achieving returns of 150%–160%. The 3* market showed similar stability. As the largest product category in the area, it generated returns of 125%–135% of traditional rents.
Southbank
For the first time in five years, the Southbank market experienced notable fluctuations in returns, after historically stable performance across the 5* and 3* segments. The 5* market recorded strong growth in the first half of the year, achieving record performance in Q2, with returns reaching 180% of headline rents.
The 3* segment followed a similar pattern, rising to 130% of market rents in the first half before falling to 110% in Q3 and stabilising modestly in Q4.
City Fringe North
Across the market, higher quality products continued to deliver returns above traditional rents, although both desk rates and returns softened in the second half of the year.
The 5* market recorded the second highest returns in Q2 reaching 180% of traditional rents. The 3*market maintained returns broadly in line with the past 18–24 months, delivering gross returns of 110%–120% and net returns of 101%–111%.
Canary Wharf
Although Canary Wharf has historically shown more volatility than other submarkets, 2025 demonstrated relatively stable performance against traditional rents across all product tiers. 5* product delivered record desk rates in Q2 and Q3, exceeding £1,000 per desk per month and achieving returns above 230% of market rents. Despite a decline in Q4, gross returns remained high at 185%.
The 3* segment mirrored this strong performance, with returns rising to 150% of traditional office headline rents in Q2 and Q3 before easing slightly in Q4 while remaining above 145%.
Stratford
Stratford continued to underperform relative to other submarkets and the traditional office market. However, flexible workspace returns remained relatively stable at 35%–45% of market rents through Q2 and Q3 before declining in Q4.
5* product is limited in Stratford, making direct comparison to other sub-markets difficult; 3* segment delivered positive returns in the first half of the year before falling below zero in Q3.
“What this index clearly shows is that flexible workspace is no longer an experimental product, it has become mainstream and needs to be carefully considered as part of a landlords offering. When the right product is delivered in the right building and location, the returns can significantly outperform traditional office rents. As landlords continue to rethink how occupiers want to use their assets, flexible workspace will increasingly play a central role in the future of the office market” Kinnear concludes.
Click here to download the index – https://hewnspace.com/the-hewn-index/
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