How hybrid working is driving demand for coastal offices

Locations such as Cardiff, Fareham, and Aberdeen have recorded a 50% increase in footfall at flexible workspaces over the past two years, as workers swap long commutes and urban sprawl for sea views, the opportunity for a healthier work-life balance, and promises of a better quality of life. With 83% of professionals who have moved to the coast saying they’d consider changing jobs to retain their flexibility, this trend is reshaping not only where people live but also where they choose to work, and therefore, where companies are now establishing their office spaces.

In 2024, the property prices in coastal areas have surged at a rate five times the national average, reflecting the growing appeal of these locations.  Mark Dixon, Chief Executive of IWG, has noted that this trend is “not only improving quality of life for employees but also delivering an economic boost to these communities as new residents bring spending power and demand for services.”

The surge in coastal office demand is likely to influence how developers and investors structure property transactions, particularly through option agreements and conditional contracts. Here are some contract structuring points I would recommend considering if you are a developer looking to capitalise on this trend:

• Negotiate longer option periods – coastal office demand is still emerging and has the potential to be more volatile than established city markets.  A longer option period gives the developer breathing space to monitor demand, secure planning, and confirm occupier interest before committing significant capital.
• Conditional contracts tied to pre-let agreements – conditional contracts linked to pre-let agreements allow developers to proceed with land purchases or construction only once a tenant has committed to leasing the space. This approach helps reduce financial risk.
• Flexibility of permitted use – given the uncertainty of long-term demand for pure office space in some coastal towns, contracts can be drafted to allow alternative uses (subject to planning, of course).  Wider uses, such as co-working hubs or even some residential conversion, will assist in making the transaction more resilient to shifting occupier needs.

The above points are all about capturing growth whilst protecting against uncertainty.  If you are considering a new office location (coastal or otherwise) or a developer looking to capitalise on emerging market trends, do get in touch with us, and we would be delighted to assist.