It is hard to find a direct economic link between flexible workspaces and economic growth. But Regus’ new study just helped to make it easier to measure.
According to the first comprehensive socio-economic study of second-city and suburban workspaces, on average, 121 new jobs are created in communities that contain a flexible workspace, with an extra USD 9.63 million going directly into the local economy.
The increasing migration of flexible office space and co-working locations to areas outside of major metropolitan cities globally is also creating a ‘flex economy’ that could contribute more than USD 254 billion to local economies in the next decade, said the study.
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.
The study highlighted the growing trend for big companies to adopt 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 it to improve employee wellbeing by allowing their people to work closer to home. But saving money and boosting productivity were also vital motivations.
Across the 19 countries analyzed, 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 factors. Japan sees the most jobs hosted from a single center 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 center. 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.'
Flexible workspaces also 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 USD 16.47 million GVA each year, of which USD 9.63 million will go directly into the local economy.
In China, businesses in suburban areas are estimated to increase GVA by CNY 55.16 million (USD 7.91 million) per annum, whereby CNY 22.45 million (USD 3.22 million) will go into the local economy.
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.
Steve Lucas of Development Economics and the report's author said, "This study reveals a shift in jobs and capital-growth is moving outside of city centers, 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."
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 continue, these communities could see more than three million jobs created by 2029.
The press release noted that this increase in jobs is the equivalent to a city the size of Buenos Aires. The forecast also predicted that USD 254 billion GVA will be added to local economies, enough to build 360 state-of-the-art hospitals.
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.
Mark Dixon, chief executive officer of 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."