Traditional Lease vs. Flexible Management Agreement – What’s Best?

For years, leases were the only game in town in the coworking world. Operators signed a long-term lease (5 to 10 years) with their landlords and paid a fixed sum every month, regardless of how much revenue they generated.

The COVID-19 pandemic changed that. The flaws of the lease model were exposed as businesses adjusted to new government regulations and employee demands, and management agreements moved from the margins to the mainstream.

A management agreement is a revenue-sharing partnership between a coworking operator and a landlord, where the operator runs the space and both sides split the income instead of the operator paying fixed rent.

This article covers what you need to know about management agreements, including:

• What they are
• The benefits they have over traditional leases
• How to negotiate one with landlords

Lease and management agreement definitions

First, the terminology:

• A lease is an agreement by which one side (coworking operator) pays the other side (landlord) for the use of an asset (real estate). Leases are straightforward. Operators agree to pay a fixed monthly sum for the duration of the agreement. This sum stays the same, regardless of how much revenue the space generates, making leases a safe bet for landlords.
• A management agreement is a flexible partnership between the operator and landlord, in which they agree to share the coworking space’s revenue. Operators are still responsible for generating that revenue (by selling memberships and additional services) but they don’t pay a fixed monthly sum. Instead, the revenue is split between the operator and landlord, per the management agreement.

Why did management agreements take off after the pandemic?

Management agreements have existed for years. They’ve been the primary mode of operation for the hotel and apartment sectors.

Commercial real estate wasn’t too interested in them. Then came the pandemic. Offices and coworking spaces sat empty, yet operators with leases still had to pay up every month.

As the economy re-opened, the standard office experience had to be tailored to government regulations and new employee expectations.

The pandemic exposed a core problem with the lease model: its inflexibility. That opened the door for management agreements.

On one side, landlords wanted to keep their flex spaces full and keep creating value, which meant accommodating the new needs of businesses and their employees. On the other, coworking operators already had the track record and know-how of creating exceptional flexible experiences for businesses.

Management agreements and coworking rental contracts became the logical route for operators who could help landlords adapt their space to what customers now wanted.

The numbers show how far this has gone. According to Savills, management agreements made up just 9% of UK flexible office operator transactions before COVID and 41% of deals in 2024. By the end of Q3 2025, 53% of operator transactions used a management agreement structure, the highest proportion recorded in five years, and Savills expects that to reach 55% for grade A assets.

Operator sentiment has moved even faster. Workthere’s Flexmark 5.0 survey found that 78% of UK operators now prefer management agreements as a growth model, up from 45% in 2023. Demand for managed office space is a big driver: in the UK, the supply of managed flex offices jumped 111% year over year in Q1 2025 as providers rushed to meet enterprise demand.

The benefits of management agreements over traditional leases

Management agreements bring a few clear advantages over traditional leases:

• More options for operators. A management agreement removes one of the biggest recurring expenses, the set monthly lease payment. Instead, you can negotiate different payment options, depending on how much revenue you bring in. CBRE reports that operators across EMEA are leading the shift to management agreements specifically to reduce capital expenditure and avoid lease liabilities.

• Flexible workspaces for businesses. Employees have made it clear they don’t want to go back to the same old office. They want workspaces that fit their needs during the workday, whether that’s collaboration, quiet time, or anything else. Landlords who can offer that (through the expertise of their operators) fill their spaces faster and keep the end customer happy.

• Net new value creation. This follows from the previous point. Better service creates more value, and because this is a revenue-sharing agreement, both operator and landlord can earn more from the space than they would with a traditional lease.

You can also compare coworking spaces vs traditional offices to see how businesses choose one over the other.

2 key points to focus on when negotiating management agreements

By now you have a good idea of how management agreements can work for operators, landlords, and end customers.

Getting landlords to sign one can still be difficult, and for a good reason. Management agreements carry more risk for the landlord because they don’t offer the same stable, predictable monthly payment. That said, more landlords are willing to have the conversation than a few years ago: CBRE notes that owners have shown stronger demand for management agreements as they look to partner with reputable operators rather than run flex space themselves.

Here’s how to overcome the objection and negotiate a management agreement by focusing on two points.

New value creation

As with any negotiation, start with what the other side wants. Here, the answer is simple: new value creation.

The key point is that traditional leases (which are static) cap landlords’ upside. Even if the space performs brilliantly, they collect the same monthly payment while the operator keeps the extra revenue.

So your first goal is to explain how you plan to generate more value with your business model. There are no fixed rules, but our experience shows you need a 20% to 30% premium over market rents for landlords to get interested.

For example, if a landlord can get $25 per square foot with a lease, you’ll likely need to get them to $30 to $35. That should be enough to justify the higher risk that comes with a management agreement.

Regular updates and reporting

Most landlords who lease a space don’t need to be actively involved in how operators run it.

Management agreements are different.

Landlords will be more interested in your business because they’re sharing the revenue. Treat them as a business partner and keep them up to date on your operations.

One way to do this is by sharing regular lead generation reports. This can be as simple as exporting files from your advertising accounts. If you ask new customers how they heard about you (which you should), send those findings to your landlords.

Simple as it is, this shows how you’re spending your marketing budget, what types of businesses you’re bringing in, and which channels produce the best results.

You should also share reports on your space’s utilization, finances, revenue, memberships, and other key metrics. These directly affect each landlord’s bottom line, so reporting on them is a must. CBRE points out that this kind of transparency is one of the main reasons landlords favor management agreements: they get a clear view of how tenants are performing inside their building.

These reports start simple but get overwhelming fast when you have to pull data from multiple tools, organize it into spreadsheets, and send it on time every month.

That’s where OfficeRnD Flex, our coworking management platform, comes in. Its analytics module helps you:

• Build dashboards with the metrics and KPIs that matter, using a drag-and-drop editor and predefined widgets. You can keep revenue, memberships, utilization, and more in one place.
• Give your landlords access to OfficeRnD Flex, on top of sending them spreadsheets. They can log in at any time. This saves you effort and shows your commitment to transparency, which helps during negotiations.

Note: If you want to see how OfficeRnD Flex can help your business in more detail, book a free demo with our team.

Get flexibility and drive more value with management agreements

Management agreements have already reshaped how flex space gets built, and the trend is still climbing. More than half of UK operator deals now run on this structure, and operator preference keeps rising year over year.

The reason is simple: they work for everyone.

Operators have more ways to negotiate with landlords and can expand without carrying full lease liabilities. Landlords can earn more than a fixed lease would pay while keeping control over how their space is delivered. Businesses get flexible, tailored workspaces, which is what they’ve wanted since the pandemic.

If you haven’t tried management agreements yet, they’re worth a serious look.

Frequently asked questions

What is the difference between a lease and a management agreement in coworking?

A lease fixes the operator’s rent for the term of the agreement, regardless of how the space performs. A management agreement ties the landlord’s income to performance: the operator runs the space and the two sides share the revenue. Leases shift risk to the operator; management agreements share it.

Are management agreements better than leases for coworking operators?

It depends on your goals. Management agreements let you expand with less upfront capital and no fixed rent obligation, which is why 78% of UK operators now prefer them as a growth model, according to Workthere’s Flexmark 5.0 survey. The trade-off is a smaller share of the upside compared with taking on a lease and keeping all the revenue.

How common are management agreements in the flex space market?

They’ve gone from rare to mainstream. Savills reports that management agreements made up 9% of UK operator transactions before COVID, 41% in 2024, and 53% by the end of Q3 2025, the highest share in five years.

How do you convince a landlord to sign a management agreement?

Show the upside and stay transparent. Landlords give up predictable rent, so you need to demonstrate a clear revenue premium over market rents (typically 20% to 30%) and commit to regular reporting on utilization, revenue, memberships, and lead generation. Giving landlords direct access to your reporting, through software like OfficeRnD Flex, makes that commitment concrete.