“What is the future of the office?” is a question dominating conversations within commercial real estate and in workplaces across the country. Every company is making decisions on the extent to which their office strategy will evolve with the rise of hybrid work. Among these possible evolutions is the adoption of flex space.
Lisa Blacklock, Senior Vice President, Colliers Real Estate Management Services (REMS), sat down with Nick DeMarinis, Vice President and Head of Sales, Atlantic Territory, WeWork; Wayne Berger, CEO, The Americas, IWG; and Sarah Bramley, Vice President, Colliers Workplace Advisory, to give us an inside look at the possibilities, misconceptions, and trends in flex space adoption, along with factors companies should take into account when considering it as part of their future space strategy.
How we define flex space: (1) Coworking space operated by a third party, (2) space in an existing building that has been designated as flex space, accessible to all tenants, and operated by the property manager, and (3) something in between – perhaps a short-term lease dedicated to a tenant and operated by the property manager or a third party.
Key takeaways from the conversation:
- Flex space isn’t new, and demand is rising.
Demand for flex space was rising before the pandemic and it’s only accelerated in the last few years. Berger outlines how the number of people and companies looking to him for flex space has increased 40%, while DeMarinis cites how WeWork’s occupancy in the Toronto market was at 84% at the end of 2022, with the demand for all-access facility passes up 112% year-over-year.
- The visit to the workplace must be worth the commute.
The workplace experience has three key elements, accordingly to Bramley: “Make it easy. Make it work. Make it worth it.” As most companies adopt a hybrid work strategy, there is a lot that can be done with existing space to meet those criteria. Furthermore, DeMarinis reminds us that “hybrid” does not simply mean home or office. There’s a “third workplace” – a flex workplace possibly located closer to home – that has the potential to strengthen productivity and culture, while reducing the major deterrent to the office: the commute.
- Flex space can be a “playground” for companies before committing to a long-term strategy.
Flex space can be a playground to try new layouts, locations, interactions within existing space before committing capital into a long-term strategy, according to Bramley. This may be advantageous when you consider an uneven economic situation and as companies continue to assess how hybrid work impacts different divisions of their business, including their ability to recruit and retain talent.
- Flex space can be customized to a company’s needs.
There’s a lot of thought that goes into the design, delivery, and construction of flex space, according to Berger, and then into the day-to-day experience of making sure you can attract new people to the space. Berger cites examples from a third-party perspective and Blacklock explains how, as a property manager, Colliers REMS has put these into practice at sites across the country.
- Partnerships are emerging between flex space providers, building owners, and property managers.
The availability of capital and level of risk tolerance are often raised when discussing flex space. With office vacancies rising, Berger and DeMarinis cite partnerships with building owners as one way they are seeking to activate vacant space and develop revenue-sharing models that spur responsible growth.
For more on the evolution of flex space, give this podcast a listen.
If you’re an owner of office space wondering how flex space could help you achieve the long-term goals of your portfolio, contact Lisa Blacklock, Senior Vice President, Real Estate Management Services.
If you’re an occupier / employer looking for how to best respond to the shifting needs of workplaces, contact Sarah Bramley, Vice President, Workplace Advisory.
Additional reading:
The New Age of Hybrid Work: what the rise of hybrid work means for office real estate needs
