Why is there so much more choice in flexible workspace?

The market for flex space has grown – and with designs that appeal to a variety of different options, business types and purposes. The global market for flex space is now worth more than £19 billion, growing by more than 10% each year for the last seven years. And it is unlikely to slow down anytime soon.

Larger corporates, such as Amazon and Microsoft, are now seeking serviced offices and flexible workplace solutions rather than long-term leases as it better fits the rapid expansion of their business plans. 75% of the FTSE 100 now have flexible workspace solutions within their portfolio to cater to workforce demand.

The growth in flexible workspace represents a revolution in the way companies find and occupy offices:

• How will companies buy workspace in the future?
• And what job roles will exist in these spaces?
• How can you review the variety of choices available?
• How are landlords and agents catering for changes in demand?

Companies looking for workspace now have more choice than ever. Flexible workspace – made up of serviced offices and coworking spaces – has grown to become a well-established part of the commercial real estate mix. As its market share grows each year, the choice of options available to those companies looking for space has dramatically expanded.

So, what are the benefits of flexible workspace for your business? And what do you need to know when choosing the right office space?

How is flexible space an attractive option in today's market?

Without the capital expenditure of a conventional lease, flexible workspaces represent a lower risk option. They also allow companies to experience coworking environments, serviced offices or shared workspace within hybrid locations, creating a more productive and collaborative working environment and greater convenience for employees.

The versatility in terms of lease length, location and design grants businesses ease and autonomy to grow and adapt via different flexible work arrangements, which has been brought to the forefront by the COVID-19 pandemic's impact. With employees working from home, businesses are now investing in options to facilitate remote working over the long-term. They are shifting to operational models based on flexibility and agile remote working in response to the pandemic and its resultant shift in employee expectations.

Additionally, the increased popularity of flexible workspaces reflects the growing emphasis on employee needs and well-being and attracts and keeps the best talent. Cubicle offices and strip lighting are unpleasant reminders of offices-past, particularly when compared to the contemporary office design and real estate many of us are accustomed to today. There is pressure now for employers to find well-designed space at the right price and in the right location. Happily, there are options in nearly all the major cities in the UK that fit contemporary client requirements.

What are the most important aspects of flexible office space as stated by tenants today?

Flexible workspaces now provide more variety than ever. Options include serviced offices, virtual offices, managed offices, and incubator and accelerator spaces:

• Serviced offices – from one desk and with the option to move in the same day.
• Virtual offices – often used for a prestigious office address and with the opportunity to use meeting room space.
• Managed offices – a bespoke and fully-branded solution from 60 desks plus.
• Incubator and accelerator spaces – allow start-ups to work within collaborative spaces that allow them to flourish, grow and share expertise.

Workspace design preferences have shifted too — away from a traditional office layout towards a more collaborative workspace design, or even unassigned workspaces whereby employees are given clean, comfortable areas to transition through independently or within teams as they choose rather than being assigned one specific desk.

Search results show tenants are looking for real estate with a broad range of amenities to improve working practices and increase employee satisfaction. 24-hour access and security, free parking, showers, disabled access, BREEAM/LEED green energy credentials, custom fittings and fixtures, and a fast move-in are all popular search terms for tenants. The most sought-after amenities are formal and non-formal meeting areas, relaxation space and outdoor space. More niche serviced office requirements include gym and wellness facilities and childcare.

Overall, tenant expectations from flex workspaces like serviced offices and coworking space have increased and widened beyond your typical office facilities in favour of a space that also caters to employee wellness and lifestyle, is environmentally conscious and is increasingly convenient for its inhabitants — a hospitality focus.

What has a rise in focus on hospitality changed in relation to the leasing of flexible office space?

Choice of space and real estate has grown enormously. Operators have become highly adept at catering for the specific requirements of customers. The emphasis has been placed on community, creating an experience and adopting a stance that is more similar to a hotel operator than that seen in your traditional office space. Focus has also shifted towards creating bespoke workplace experiences tailored to a specific tenant need.

This focus on hospitality has been adopted with great success by the retail industry. By offering greater choice and high-quality amenities, corporate real estate can ensure that occupiers are treated as more than just paying tenants and are considered long-term partners critical to the success of a particular location.

The importance of technology in productive office spaces

According to our research, the increasing adoption of wireless technology and cloud computing enables the use of flex space. Respondents overwhelmingly agreed that wireless connectivity and security are the most critical technology-related features of these spaces. Of course, it is the improvement of cloud computing and product security that has really driven the ability to work in an agile way with global teams interlinked by virtual servers. As reflected in our research, wireless tech was far and away the most important technology feature for users and decision-makers and as it offers greater freedom of choice as to where and when they work.

Such features make flexible office space more enticing, as do new proptech innovations which help create a customised office space, boost productivity and increase employee engagement. Integrating the Internet of Things (IoT) into office space can improve business management, productivity and cost-effectiveness, for instance through applications which predict and flag maintenance issues, or devices which ensure energy efficiency. Meanwhile, GreenTech in flexible office spaces enables companies to ensure they meet their sustainability pledges.

How does this shift towards flexible workspaces affect landlords, conventional property advisers and the landlord-tenant relationship?

Landlords, property managers and agents alike have had to apply the "innovate or die" mantra to survive in an increasingly agile and customer-led real estate market. Several years ago, the go-to option would have been a long-term lease, landlords are now increasing the amount of flexible space in their portfolios, and the average lease length is down to 5.2 years. Our Marketplace for Flexible Work report showed that 41% of landlords view flexible space as a long-term solution that allows them to attract new kinds of tenants.

With tenants demanding more from their workspace — not just amenities but also in terms of shorter lease lengths and increasingly agile approaches to their workplace strategy – landlords and flex space providers are listening and responding to these demands. 

How will companies procure flexible office space in the future?

Businesses now have a variety of ways to procure space easily and quickly. There are online aggregators that compare prices and even provide a free service to offer market guidance for flexible workspaces – such as our own Instant Offices. And there are others such as commercial property portals that list conventional leases and other space types.

A growing number of companies are choosing to outsource the process of sourcing and operating workspaces altogether. Running a corporate real estate portfolio requires significant resources, from procurement and project management experts to workplace design and fit-out. The shift to the outsourced delivery model allows organisations to focus on their core business.

And there are also turnkey occupancy solutions: spaces that are available on a flexible lease and which do not require a fit-out. The turnkey solution literally allows the new tenant to turn up and plug-in and pay on a quarterly basis rather than via a conventional lease. It is perfect for companies that want to move fast – with a requirement of 20+ or more – and do not have the internal expertise to manage their own workplace operations.

How can companies keep their branding when using flexible office space?

In many serviced office spaces and coworking centres, client branding is low-key, and the predominant branding belongs to that of the operator. For many customers, this works well as they are at a stage of growth whereby their own branding matters slightly less. However, for firms looking to scale up, branding becomes increasingly important as they invest more in marketing and sales and build a strong corporate culture for employees and customers. Luckily, there are now options to address this.

There are a small number of companies that will deliver this type of bespoke outsourced flexible office space. The Instant Managed Office delivers a bespoke, branded space in as little as six weeks. WeWork also offers an 'Enterprise' solution, allowing larger corporates to enter new markets, choose real estate that truly works for them, and scale up whilst retaining their brand authenticity.

What is the average cost range that most flexible workspace occupancies fall under?

According to data analysing the country's top flexible office space locations, companies of all sizes are choosing flexible workspaces to save costs. The average monthly cost of renting a flex workspace is £500–£1500 per person per desk in London. Monthly flexible workspaces in other major UK cities cost, on average, anything in between £150 to £500 per person per desk. This is as much as £4,000 cheaper per year than conventional leased spaces.

The growing flex market gives clients options – lots of options. With any market, it can take some guidance to best understand what is right for your business and seek out the best deal. Many operators and landlords are prepared to negotiate and work with customers, with the goal of creating a long-term relationship. However, it still takes research and market knowledge to assess correct pricing levels and what can be included within a flexible real estate office deal.

In conclusion, flexibility in terms of physical office space and office design helps companies become more agile

The flexible workspace market has evolved rapidly, now providing an abundance of real estate choices for organisations of all sizes. An increasing amount of people are seeking a choice on where and how they work, and this is impacting the type of office space firms are choosing to occupy.

The real value of flex, above all else, is in giving businesses the ability to grow or contract on their terms, and in the space that is right for them. Flexible office space is an exciting eventuality that helps companies grow and become more agile.