While much has been written about whether or not the flexible space sector will survive the COVID-19 pandemic, flexible space will not just endure—it will thrive.
Seventy-three percent of respondents to CBRE’s recent survey of 126 senior-level global real estate executives say flexible office space will be a part of their long-term real estate strategy. In many cases, these companies now plan for flex to play a greater role in their future portfolio strategies than pre-COVID-19.
What role will flexible office space (coworking, serviced office, suites) likely play in your long-term
real estate strategy?
Source: CBRE Research Client Survey, June 2020.
The Future is Wide Open
Uncertainty has always been a certainty in the business world, but perhaps never more so than today. When will the COVID-19 pandemic end? When will the economy recover? How will that impact headcounts? Will employees return to the office or prefer to continue working remotely? Will employees still want to live in densely populated cities or will they prefer more open suburbs? While many are speculating about the answers to these questions, no one knows for sure, and it may take years to find out.
Given this, the inherent agility flex space provides, and lack of capital commitment, should be very compelling to organizations large and small.
Flex space enables organizations to leverage their real estate as an agile asset rather than a fixed one, and CBRE’s Agile Practice Group has found that the economic value of flexibility is actually greater than the cost of a flexible lease.
“Organizations who’ve used flexible space have seen its value proposition proven,” said Christelle Bron, CBRE’s Americas A&T Agile Practice Leader. “COVID-19 is rapidly accelerating a real estate paradigm shift where occupiers’ space decisions are no longer written in stone but can shift constantly to accommodate their business needs.”
While the growth of the flexible space sector has slowed in part due to the COVID-19 pandemic, providers who can adapt (de-densify profitably, increase health & safety protocols, and offer new products based on developing needs) will emerge from this period stronger than before. Landlords are also increasingly offering their own flexible space solutions or entering partnerships with third-party providers to meet expected tenant demand and provide more value for their customers.
“As occupiers seek to build more flexibility into their portfolios, landlords are increasingly recognizing that real estate agility is a long-term trend. Landlords who are quick to adapt to evolving tenant expectations – for instance, by providing “core and flex” solutions – will be well positioned for the post-COVID-19 era,” added Manish Kashyap, CBRE’s Global A&T Agile Practice Leader.
Click here to learn more about CBRE’s Agile Practice Group and listen to CBRE’s Julie Whelan and Brandon Forde speak on how major companies are viewing the future of the office in the COVID era.