Report | Adaptive Spaces

Awakening an Era of Flexibility Flexible Office Space 2022

Flexible Office Space 2022

January 28, 2022


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Despite the challenges posed by pandemic-related restrictions, the North American flexible office market showed signs of recovery in 2021. Flex providers reported a rebound in sales and occupancy, particularly from small and medium-size businesses (SMBs). Meanwhile, a growing demand pipeline from enterprise tenants underpins an optimistic outlook for 2022. Although the omicron variant could hamper the recovery, flexible space solutions clearly will be a key part of companies’ real estate strategies as they adopt hybrid work arrangements and as new space use patterns emerge.

Figure 1: Historical Flexible Office Space Supply Growth & Penetration

Source: CBRE Research, Q3 2021.
Note: Percentages above bars indicate year-over-year inventory growth.

Since mid-2020, 144 flexible office providers collectively reduced their footprint by 12.2 million sq. ft. (gross) in 669 properties across 42 U.S. markets. The largest flex markets of Manhattan, San Francisco and Los Angeles accounted for 47% of the reduction in flex supply. WeWork and IWG, which together provide more than half of the total U.S. flexible office supply, accounted for 48% of the net losses by square footage. Knotel accounted for 20%.

These closures resulted in flexible office supply contracting by 8.7% year-over-year in Q3 2021, although some providers expanded and even acquired competitor locations that limited the net effect of closures. More acquisition activity is expected to occur throughout 2022 as providers look to gain a foothold in new markets and grow their scale in existing ones. Supply growth is expected to resume in 2022 as occupier demand increases due to new patterns of work.

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