The Return of Flex Office Growth in the Washington Metro Region

The COVID-19 pandemic presented a period of disruption for the flex office industry. During the first 12 month of the pandemic, 22 flex locations in the Washington metro region closed operations for a total of 725,000 sq. ft., with most closures concentrated in the District of Columbia (69% by sq. ft.).  

As the U.S. workforce began its return to the office, flex demand started to show signs of recovery. In the D.C. region, flex supply has grown by more than 600,000 sq. ft. since the beginning of last year. Driven by occupiers’ increasing emphasis on flexibility as they adopt and evolve hybrid work arrangements, a positive outlook for flex space demand is indicated for 2022 and beyond. According to CBRE’s Spring 2022 U.S. Office Occupier Sentiment Survey, more than half of respondents (up from 35% in 2021) expect flexible office to make up a significant portion of their portfolio. Some occupiers are leveraging flex product as initial touchdown space before committing to a traditional, longer-term lease, as shown in recent examples of TikTok and Robinhood in the District.

Property owners are also increasingly participating in the flex office market to capitalize on the rising demand, both in forms of owner-operated concepts and management agreements with flex operators. This trend is expected to continue in the coming months.