People who use flexible office spaces want to increase their usage there to comprise half of their workweek – an increase of 19% from current levels – while decreasing their remote working time by the same percentage, according to a report issued this week by Cushman & Wakefield in conjunction with WeWork.
With sentiments such as these, the argument for companies contemplating using flex office space has perhaps never been stronger.
Companies and workers are finding flex space working arrangements to allow for valuable collaboration, a better balance of office and remote work, and more options overall, and businesses appreciate the opportunity to avoid lengthy lease terms.
Avoiding ‘Too Much’ WFH
Rob Lowe, executive managing director and partner at Stream Realty Partners, tells GlobeSt.com that one of the main lessons learned from the pandemic is that workers enjoy the flexibility of working from home – no commute, less unwarranted supervision, more comfortable work attire, etc.
“And employers learned that many corporate functions perform well without the requirement of a five-day, in-person work week – accounting, marketing, etc. The question persists as to what’s the right WFH balance.
“Today, employers have landed on the conclusion that too much WFH takes away from culture, learning, accountability, and ultimately productivity. Workers are accepting this conclusion with the mandate that they have more flexibility in their work schedule.”
Flex Office Use Strong Well Before Pandemic
Kevin Fagan, Moody’s Analytics’ Head of CRE Economic Analysis, tells GlobeSt.com that flex office usage has been very strong, even before the pandemic.
The amount of space leased to flex office operators more than doubled across the US in the roughly three to four years prior to 2020, and that was not limited to WeWork.
Moody’s tracked roughly 300 other operators in the US, ranging from one-off locations to small specialty flex offices supporting specific industries or groups of people, to larger operators doing enterprise solutions like Industrious and IWG.
“Given the increased need for flexibility to support hybrid working, we expect the growth trend to continue,” Fagan said.
“From a commercial real estate risk perspective, this can be positive or negative. On one hand, more volatility is introduced by the much shorter lease terms common for users of flex office space (small single offices are often month-to-month, while even larger enterprise leases will only be roughly three-year maximum, as compared to the average traditional lease of roughly nine years).
“On the other hand, a flex office can raise the value of a property. For example, going back to the mid-2000s in London, having a well-curated flex office operator in your building is typically seen as an amenity by your tenants because it offers them very functional common area space for their workers and guests, and it serves as a mechanism for companies to grow or shrink their workforce without having to go through the expensive process of adjusting the amount of traditional, longer-term lease space they occupy.”
Better Lease Terms, Room to Grow
Regan Donoghue, senior principal strategy at Unispace, tells GlobeSt.com that the demand for flexibility started a few years before the pandemic when tech firms were refusing to sign leases longer than two years.
“They did this because they were experiencing rapid growth, and we’re constantly evolving into new ways of working,” Donoghue said. “While most firms returning to the workplace are not going through rapid growth, they are most certainly faced with constant change.
Looking at a future that is ambiguous and uncertain, the best approach any firm can do is to plan for the imminent change. A hybrid solution only solves for when an employee would come in and possibly where they might use a shared seating arrangement.
“A work environment needs to be more; it needs to be responsive and agile to best support the needs of the workers.”
Donoghue said that humans are wired for survival and thrive in environments where they are given the ability to design how they wish to implement the task at hand.
“For so long, the workplace has been a static and stale space that has drained the creativity of many (hello isolated offices, sad cubes and noisy benches). It’s time we let our work environment become an adaptable and flexible space that will spark brilliance in the minds of many.”
Flex Options and Desirable Locations Key
Beth Moore, head of strategic growth at Raise Commercial Real Estate, tells GlobeSt.com, “Given the high-growth nature of many of our clients, flex has become a key pillar in their portfolio strategy whether they are launching a new market, incubating a new idea, or exploring options at specific locations.
“As companies plan for the future, our clients are using flex and on-demand spaces to test fit and assess what work arrangements are resonating with their employees and business needs.”
Moore added that one thing is certain, “the amount of flex options, desirable locations, and cost-effective solutions means flex will be an integral part of our clients’ strategies for the foreseeable future.”
Flexibility is Worth Paying For
Alex Snyder, Portfolio Manager, Real Estate Securities, CenterSquare Investment Management, tells GlobeSt.com that “in a land of uncertainty, flexible space is king. The more companies need to be able to pivot and move in an ever-changing world, the more they value flexibility, and the more they’ll pay for it.”
Snyder said that providers of flexible space, both in terms of sizing and time, stand to benefit from this need.
“It’s a way to recruit talent,” he said. “Providing great flex space is selling pickaxes into the gold rush. Employees don’t hate the office, but they hate the commute. By and large, they like socializing, enjoy collaborating, and take joy in nice spaces.
“If small satellite offices can offer time to come together and collaborate, build culture, it will be desired by both employers and employees.”
WFH vs. Flex Work Varies by Location
Serge Vishmid, managing principal, Atlas Capital Advisors, tells GlobeSt.com that preferences for flex space vary by geography, even for the same clients.
For example, Vishmid tells GlobeSt.com, in Northern California (the Bay Area), “the model is very much remote work at this point, whereas in Florida and Chicago virtually everyone is back in the office full time.”
In Orange County, Calif., he is seeing more of a “flex” type of approach with more and more employees starting to actually come back to the office. Overall, the expectation from the C-Suite is that most employees will be back in the office full-time over the next 18 to 30 months.
Seeking Space That is Inspiring
Katie Pace, director of launch communications and media relations at Steelcase, tells GlobeSt.com, “We don’t necessarily have data showing whether workers are choosing flex spaces or not. However, we know workers prefer spaces that are more inspiring and offer more choices to accomplish different types of work — places where they can both collaborate and focus.
“This presents an opportunity for organizations to rethink their workplace to create a place people want to work from and earn their commute. The workplace, whether a traditional office or a flex space, needs to be more enticing than remote work setups.”