A new report from Colliers International makes a case for the continued growth of the flexible workspace market.
The pandemic has sparked a series of questions about the future of office, and the answers have swung in every direction. Some have argued that this is the end of the flexible office environment, which requires density and shared workspaces. In its latest flexible office report, however, Colliers International makes a case for continued growth of the flexible workspace market.
The report also argues that a new generation of flexible space is on the horizon. “If Flex 1.0 was about where people work; Flex 2.0 will be increasingly centered around how people work,” Knotel CEO Amol Sarvar said in the report. Currently, flex space accounts for 25% of total office inventory worldwide. However, the report predicts that the supply of flex space will grow by two to three times over the next five years.
The report outlines six drivers of the flex market growth. Corporate demand is the top reason. Corporate office users have needed more flexibility in workspace, fueling the adoption of flex leases over the last few years. The pandemic has only accelerated this trend, according to the report.
In addition, growth in secondary and tertiary markets; new operating models, including revenue partnerships between flex space operators and managers; the flex space vendor economy, which has lowered the barrier-to-entry for new operators; the entry of traditional landlords providing flexible spaces; and the emergence of niche operators who specialize in spaces for artists, engineers, women or other working groups, are also driving growth in the market.
Office occupiers are also bullish on the flex space market. A survey conducted by Colliers found that 90% of occupiers believe that flexible office space will increase in the future. Most of those respondents, 44%, said that this would mean a need for flexibility in traditional lease structures, while a smaller portion, 25%, said that the growth in flexible lease space would mean more agreements with flex operators.
In the US, flex space currently has a flexible inventory of 62.5 million square feet, with the majority, 41.1 million square feet, located in CBD markets and another 21.4 million square feet located in the suburbs. Manhattan is by far the leader in flex space supply, accounting for 16.2% of the total in the US. The remaining top 10 markets—which includes Miami, Boston, Los Angeles, Seattle and San Francisco—for flexible workspace together account for 29.6% of the total market supply.
From 2018 to 2020, the supply of flexible workspace increased by 36.5%, and growth was the strongest in secondary markets. It was still growing rapidly through the first half of 2019. That growth has slowed significantly in the last 12 months, largely due to the first half of the pandemic. While the market has been slowed by the virus outbreak, the pandemic has likely set in motion trends that will support growth once workers can go back into the office.
Source: “Get Ready for Flex Workspace 2.0”
The report also argues that a new generation of flexible space is on the horizon. “If Flex 1.0 was about where people work; Flex 2.0 will be increasingly centered around how people work,” Knotel CEO Amol Sarvar said in the report. Currently, flex space accounts for 25% of total office inventory worldwide. However, the report predicts that the supply of flex space will grow by two to three times over the next five years.
The report outlines six drivers of the flex market growth. Corporate demand is the top reason. Corporate office users have needed more flexibility in workspace, fueling the adoption of flex leases over the last few years. The pandemic has only accelerated this trend, according to the report.
In addition, growth in secondary and tertiary markets; new operating models, including revenue partnerships between flex space operators and managers; the flex space vendor economy, which has lowered the barrier-to-entry for new operators; the entry of traditional landlords providing flexible spaces; and the emergence of niche operators who specialize in spaces for artists, engineers, women or other working groups, are also driving growth in the market.
Office occupiers are also bullish on the flex space market. A survey conducted by Colliers found that 90% of occupiers believe that flexible office space will increase in the future. Most of those respondents, 44%, said that this would mean a need for flexibility in traditional lease structures, while a smaller portion, 25%, said that the growth in flexible lease space would mean more agreements with flex operators.
In the US, flex space currently has a flexible inventory of 62.5 million square feet, with the majority, 41.1 million square feet, located in CBD markets and another 21.4 million square feet located in the suburbs. Manhattan is by far the leader in flex space supply, accounting for 16.2% of the total in the US. The remaining top 10 markets—which includes Miami, Boston, Los Angeles, Seattle and San Francisco—for flexible workspace together account for 29.6% of the total market supply.
From 2018 to 2020, the supply of flexible workspace increased by 36.5%, and growth was the strongest in secondary markets. It was still growing rapidly through the first half of 2019. That growth has slowed significantly in the last 12 months, largely due to the first half of the pandemic. While the market has been slowed by the virus outbreak, the pandemic has likely set in motion trends that will support growth once workers can go back into the office.
Source: “Get Ready for Flex Workspace 2.0”
