Brief | Adaptive Spaces

Changing Work Patterns Point to Increased Demand for Flexible Workspace

21 Apr 2021 2 Minute Read

With continued easing of pandemic-related occupancy restrictions, flexible space options are increasingly becoming a key component of companies’ short- and long-term strategies for returning their workforces to the office.

The rise of remote working over the past year has greatly accelerated the acceptance of flexibility in terms of where and how employees will work. This may include allowing employees to work outside of the traditional central office location and from certain satellite locations nearer their homes.

In CBRE’s most recent Global Occupier Sentiment Survey, conducted in September 2020, 86% of occupiers said flexible office will be a part of their long-term real estate strategy. Additionally, 70% indicated that some portion of their workforce will be allowed to work remotely full-time and 61% indicated that all employees will be allowed to work remotely at least part-time.

The flexible office market’s staying power was evident in 2020 when it withstood the severe pandemic-related restrictions that led to an economic recession. Flexible office supply in the U.S. and Canada dropped by only 2.6% (2.3 million sq. ft.) year-over-year, while the overall office market posted 87.2 million sq. ft. of negative net absorption in 2020.

Figure 1: Historical Flexible Office Supply Growth & Penetration (U.S. and Canada)

Historical Flexible Office Supply Growth  Penetration US and Canada
Source: CBRE Research, Q1 2021.
Note: Percentage above each bar is year-over-year growth rate.

Three of the five largest flexible office markets (Manhattan, Boston and Los Angeles) saw net contractions in supply last year. Those that posted supply growth were mostly secondary markets, such as Tampa and Philadelphia, where office demand was less impacted by the downturn.

Figure 2: Top Markets with Net Expansions & Contractions of Flexible Office Space in 2020

Top Markets with Net Expansions  Contractions of Flexible Office Space in 2020
Source: CBRE Research, Q1 2021.
Note: Only markets with 50,000 sq. ft. of gross flexible office expansions in 2020.

Though further closures and consolidations are expected, flex office solutions are increasingly a part of occupiers’ long-term portfolio strategies. Additionally, flexible space is emerging as an attractive office building amenity.

Figure 3: Most Desirable Office Features

Most Desireable Office Features

Source: Global Occupier Sentiment Survey, CBRE Research, September 2020.

Most occupiers in CBRE’s survey indicated flexible office space options and shared meeting space were important site selection criteria (Figure 3). Rising demand, coupled with the relatively minor drop in supply last year, should lead to a healthy future for the flexible office market.

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