The expected influx of flex supply to meet hybrid working needs is impacting flex workspace providers in their strive to scale their offerings. In this process, there are common challenges that stand in the way.
With occupiers embracing hybrid work and flexibility at the core of today’s real estate strategies, the evolving requirements for the right workspace products continue. To keep pace with hybrid working needs and the growth of the flexible office sector, there will need to be an influx of flex supply in its many forms. This will undoubtedly have a significant impact on landlords and flexible workspace operators striving to scale their offerings.
Flex providers must make important and well-informed decisions to capture this growth opportunity efficiently and successfully. But these decisions come with complex challenges. Below we outline some of the common obstacles that workspace providers are facing as they grow their flex portfolios in line with occupiers’ workspace requirements while also staying profitable.
Understanding achieved rates in new markets
In the flexible workspace industry, there has historically been scarce or muddled data at best to effectively determine how profitable an asset can be, especially in new markets. New locations are risky and come at a significant investment. Selecting the wrong location can come at a big expense. Insight into achieved transaction rates, occupancy, and flex demand in a particular market can help determine the potential value of a building or asset. While operators can always default to mystery shopping, they can’t easily get achieved rates. The lack of this level of granular data to assess new and existing markets or locations poses a risk to workspace providers.
The strain on in-house resource
Capturing market data is obscure and time-consuming. Mystery shopping drains resources. It is rarely accurate and requires constant updating and iteration. For operators and landlords expanding their portfolios, the focus needs to be on growth, not tracking down data points in an Excel spreadsheet.
Negotiation and underwriting
For an operator signing new location deals or a landlord securing additional funding with investors, asset or micro market level data is table stakes, but not easily available. Broker insight and guidance is hearsay at best, and can rarely be backed up by transacted rates. Having this information adds credibility to underwriting assumptions and negotiation discussions and can help secure better leasing deals for new locations.
Knowing how competitors are performing
When running a flex operation, it’s key to know how you’re tracking against competitors. But data points for benchmarking such as achieved rates based on actual transactions, square foot pricing, size of the offering, occupancy, demand and general deal flow have never historically been tracked or visible in a single platform.
What’s the common thread across these challenges? Surprise, surprise. It’s data. To increase the supply of flex workspace and products needed to match occupier requirements and growth ambitions, providers must be armed with reliable data from actual transacted deals in the market. The underlying challenge is data availability, reliability, and transparency across markets.
Not only are data points such as supply, demand, pricing and occupancy critical for opening new locations, but they are critical for identifying poor-performing locations. Poor performers can drain resources and negatively impact the bottom line.
Your Strategic Partner
We at Instant are armed with unrivaled data from our flexible workspace industry database and insights from over 24 years of expertise in this market. From identifying new locations and sourcing closed centers to providing industry-standard underwriting assumptions and support with lease negotiations, we are your strategic partner to overcome data challenges and grow smarter and faster.
To learn how you can identify profitable assets in the right markets for your next expansion, talk to our team about Location Services.
Looking to do it yourself? Join the ranks of workspace operators accessing accurate market data via our data intelligence platform, CoworkIntel.
