While the flex office industry has great opportunity for growth, it faces several immediate challenges:

Lack of User Experience with Flex Space Models

Although many occupiers would like to incorporate flexible office space into agile real estate strategies, they often are unsure how to execute it. Experienced real estate advisors who can guide occupiers on the best creative structures will be key to wider flexible space adoption.

Technology Shortcomings

Real estate has been notoriously slow in the adoption of new technologies. Greater advances are particularly needed to aggregate flexible office space availabilities and present them to consumers. New platforms are under development that will allow users to search, book, pay for and track space utilization. Further development in these technology platforms will be important to support growth, user experience and healthy competition within the flexible office space market.

Recovering Office Market

Landlords will continue to cut rents and offer attractive incentives to fill space amid high vacancies. This makes direct space more competitive vis-à-vis flex space, particularly for price-sensitive occupiers.

Enterprise Users’ Privacy Requirements

Larger teams (20+ workers) will require secure, private offices to meet their flexible office space requirements. Flex space accounts for less than 2% of total U.S. office inventory and an even smaller portion is next-generation space with a mix of private space and shared amenities. Flex space providers will be challenged to ensure they have the right type of space in the right markets to satisfy enterprise occupier demand.