I'm Flexible #3 - Scott Homa

In the latest installment of the “I’m Flexible” series, Ben Wright, Global Head of Partnerships at The Instant Group, speaks with Scott Homa, Head of Americas Property Sectors Research at JLL, about the profound shifts in the flexible office market. The conversation delves into the ongoing recovery of the office sector post-COVID, the impact of hybrid work on space demand, and how companies and landlords are adapting to new realities. Together, they explore whether these changes are cyclical or structural, how the market is tracking toward JLL’s famous “30% flex by 2030” prediction, and the growing role of management agreements and second-generation office spaces. 

View highlights from “I’m Flexible #3 – Scott Homa” at the end of this article below. Access the full episode from the button on the right.

Magnitude of Change in the Office Sector 

Scott Homa described the disruption COVID-19 caused as unlike anything the office market had seen before, with 274 million square feet of office space vacated in the United States. Despite this, the market has begun to recover, with leasing activity returning to 90% of pre-pandemic levels. However, the nature of office use has changed dramatically, with many companies still grappling with hybrid work strategies. 

“Vacancy rates are at an all-time high, but we’re seeing more clarity now, and companies are finally able to solidify their workplace strategies.” – Scott Homa 

This recovery is fragile, especially with landlords dealing with challenges like loan maturities and rising interest rates. Still, Homa expressed optimism that the sector is stabilizing after several years of upheaval. 

Cyclical or Structural Change? 

One of the most pressing questions in the office market today is whether the shifts are merely cyclical or reflect deeper, structural changes. Homa believes it’s a bit of both. While rising interest rates have put immense pressure on office investors, some of the changes—like the shift toward hybrid work and the reduction of physical office space—are likely here to stay. 

“There are structural changes in demand that the market needs to adapt to, but there’s also a cyclical component driven by interest rate hikes and loan maturities.” – Scott Homa 

This balance of cyclical and structural factors will shape how the market evolves over the next several years. 

Tracking the Famous 30% by 2030 Prediction 

JLL made headlines with its prediction that 30% of all office space would be consumed flexibly by 2030. According to Homa, this prediction is still on track, but the way flex space is being consumed has evolved. Instead of coworking operators like WeWork dominating the market, much of the growth is now driven by landlords offering spec suites and expanding amenities to accommodate tenant needs. 

 “Landlords are now creating pre-built, flexible office spaces that can be delivered faster and more economically. This is driving much of the growth in flex space today.” – Scott Homa 

The flexible office market is expanding, but not necessarily in the way many originally envisioned. 

Management Agreements: A New Frontier for Operators 

For operators in the flexible office sector, one key area of growth is management agreements with landlords. These agreements offer a revenue-sharing model and reduce risks for both parties. However, Homa pointed out that there’s still work to be done to build trust and demonstrate the long-term success of these agreements. 

“We need a track record of success to prove that management agreements can deliver steady cash flow, much like the hotel model.” – Scott Homa 

With the right data and transparency, management agreements could become a standard model for the future of flexible workspaces. 

What’s Driving Space Decisions? 

Homa and Wright explored how occupiers are making decisions about office space in today’s market. While there are more options than ever, including subleases and pre-built spaces, companies are increasingly focused on quality over quantity. They want offices that offer a great employee experience, with amenities that foster collaboration and culture, rather than simply reducing costs. 

“Tenants want the office to be a magnet for employees—a place for learning, collaboration, and mentorship. It’s about creating spaces that people want to be in.” – Scott Homa 

This shift is redefining what companies are looking for in office space and pushing landlords to adapt to new expectations. 

Second-Generation Space: A Growing Opportunity 

One of the more surprising developments in the post-pandemic office market is the growing demand for second-generation office space—previously occupied spaces that have been upgraded or renovated. With new construction slowing down, these spaces offer an attractive, cost-effective alternative for many tenants. 

“There’s now a quantifiable increase in demand for recently renovated second-generation space, as tenants seek out well-located, upgraded offices.” – Scott Homa 

Landlords who can offer high-quality, flexible spaces, even if they aren’t brand new, are well-positioned to attract tenants in this evolving market. 

If you’re a landlord looking to better position your spaces, meet the demands of modern office tenants, and grow your revenue we want to hear from you. Learn more about how The Instant Group helps landlords succeed here.

Highlight: Second generation space and its growing importance 

Highlight: What variables are driving space decisions? 

Highlight: Management agreements – advice to operators 

Highlight: Magnitude of change in the office sector 

Highlight: How are we tracking toward the famous 30% by 2030 prediction? 

Highlight: Cyclical or structural change?