“The increased demand for flex space is structural and not solely a result of the pandemic. As a result, we are seeing landlords and building owners including both flexibility and hospitality services into their portfolios,” says Homa. “They are exploring multiple methods of driving foot traffic, generating leasing prospects, and delivering modern amenities to tenants within these new flex spaces.”
Jacob Bates, Managing Director, Head of Americas Flexible Space at JLL, agrees that tenants have started to see flex as a key part of their overall business strategy. “Companies are looking for the agility that flex space provides,” he says. “Historically, businesses have been able to increase or decrease employee headcount according to market conditions, but they’ve felt stuck in long-term leases and space that no longer serves their needs. After all, you can’t lay off your real estate in times of trouble! But when a tenant starts putting a significant percentage of a real estate portfolio into flex space, they gain a new level of flexibility both from a cost and a space perspective that allows them to match their footprint to the changing needs of their talent base.”
Plenty of room to grow
At the moment, only three percent of the occupiers that JLL surveyed use flexible space for more than a tenth of their total office footprint. Still, JLL expects flexible workspace to continue its grow trajectory from a sliver of the overall market to a critical, mainstream element of the commercial real estate landscape.
“The adoption rate will vary among industries, but we still expect flex space to represent 30% of the market by 2030,” Bates notes. “I would say that high-tech and creative companies may integrate flex space into their office portfolios more quickly, although even we’ve seen even financial services firms move a bit more aggressively to add flex space during the pandemic.”