COVID-19 disrupted the way we use office space and accelerated the transformation towards flexibility.
Traditional office providers, property managers, and landlords now consider incorporating flex into their portfolio because flex seems to be the future of office space.
If you fall into this category, you might be still confused or unsure of what flex exactly is, why it’s the future, and how you can benefit from it.
We created this post to help you figure this out, take advantage of the workspace revolution and stay ahead of the game.
Now, let’s dive into the basics of flex space.
With its increasing popularity, it is not rare to see the terminology around flex space frequently misinterpreted.
The terms “coworking space”, “serviced office”, “flexible office space”, “flex space” can often sound confusing.
Although they might be a little different from one another, they are all united by the flexibility of lease terms and focus on the tenant experience.
Ultimately, “flex” can be used as a parent category of all these types of office spaces.
Another definition of “flex space”, according to JLL, is broadly any space that is operated by a third-party office operator.
But in reality, flexible spaces can be managed by flex workspace companies, individual landlords, or via various partnerships between the two. Also, they are operated on a short-term lease, on average between one month to three years.
Another common characteristic of these offices is the multipurpose design that increases productivity, improves the tenant experience, and encourages engagement.
The main concept of flex space is to accommodate the diverse needs of workers, putting the focus on the human experience at the workplace. The flexible workspace can convert into a collaboration space, a conference room, or a quiet zone, depending on the needs of the employee who uses it at the time.
Although there are plenty of types of flex spaces, JLL points the following two as the main ones:
There is also a hybrid version of a serviced office and a standard commercial lease, sometimes called “managed office”.
The managed space is catered to the needs of the corporations with contract terms over a year. This kind of office space provides a branded workspace with a package of services tailored to individual business needs.
The demand for flexible workspace solutions has been steadily increasing in the past 10 years (at least!) and 2020 just fueled this demand.
Most standard leases range from 7 to 15 years. But companies are no longer willing to stick to traditional leasing terms, especially in times of uncertainty and global pandemic.
Ultimately, this creates a lot of struggles for landlords, and traditional office providers.
The disruption in the flex market is notable, especially in the corporate sector. Before, flexible space mostly served the needs of freelancers and start-ups, whose struggles of projecting future cash flows craved for flexibility.
Now, the focus is on bringing in the corporate audience that aspires to accommodate the wishes of its employees in order to attract the best talent.
And what employees wish nowadays is clear – abandon the traditional office environment in favor of adopting the hybrid workspace.
The lockdown regime educated us on the pros and cons of working remote, and now workers are the ones to demand and lead the change of the way we use offices.
For example, one of the models developed for the corporate clients to be adopted is the Hub and Club hybrid model workspace model. It offers a network of workspaces inside and outside urban centers, including home offices, coworking, satellite offices in combination with the company HQ.
The current global pandemic has brought unprecedented challenges to organizations. One of the biggest problems in the commercial real estate sector turned out to be the inability of tenants to pay rent during the massive lockdowns.
In turn, landlords got stuck with empty buildings and no inflows, and both sides had to face the harsh reality of inflexible long-term contracts.
And here come the benefits of flex for both landlords or operators, and occupiers.
Flexible office can give occupiers safety in the form of a shorter-term contract. This way, they can modify the space, amenities, and services, in conjunction with changes in their financial situation and strategic goals.
Additionally, flexible space takes over some of the occupiers’ traditional duties, such as design, facilities management, and provision of amenities, pursuing the principle of “everyone’s doing what they do best”.
But flex has numerous benefits for you as a landlord or operator, too. Here’s what you can achieve with flex:
Working from home is here to stay, but companies still need office space. What has changed is how they want to rent and use the workspace.
They all crave flexibility. Huge corporations like Apple, Twitter, and Facebook are now adopting the flexible working model.
They allow their employees to work both from home and in the office.
This hybrid approach grows in popularity leading to companies and professionals looking for flexible ways of renting and using office space.
And that’s why it becomes essential for landlords and operators to adopt flex as part of their portfolio.
Adding flex space to your existing portfolio of long-term offices will provide you with an extra revenue stream.
As a landlord, you will be able to attract new tenants and increase foot traffic inside and around your building, have fewer vacancies, and diversify your offerings by making yourself less susceptible to economic downturns.
Moreover, you can sell your flex space at a higher price per square meter compared to your long-term office space. The shorter the lease, the higher the price.
Additionally, during an economic downturn, the demand for flex space will always be higher compared to traditional offices.
A joint venture model with global and regional operators can help landlords leverage the expertise and know-how of prominent coworking brands. In turn, landlords can offer expertise on capital and resources.
Such partnerships can help landlords reduce competition and consolidate the market while providing increased brand value and better service offerings to operators.
A smart workplace experience technology can help you automate and streamline operational processes, drive demand, and optimize revenue.
Having the right tech stack will help you avoid wasting resources on low-impact improvements or systems and focus on providing exceptional value to your tenants.
Various technological solutions can assist flex spaces with their day-to-day operational activities, such as membership management, billing, desk, and room bookings.
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