Once considered a niche offering, flexible office space has become a prominent component of building owners’ and corporate occupier’s real estate strategies. As such, it represents a structural shift in office leasing that will survive– and perhaps thrive– in an economic downtown.
This shift has come at a time when business models predicated on sharing, such as Airbnb and Uber, have disrupted traditional industries. While the real estate industry is rarely a first mover, especially with trends that might disrupt how it is valued, the explosive growth of flexible office space this late in the economic cycle is not surprising.
Flexible office space has long been a viable solution for freelancers, remote workers, and startups. Now it is rapidly gaining ground among large enterprises because of its flexibility, speed, and capital deferral– benefits not widely available through traditional leasing. Enterprise use of the flexible space model is essential to drive the continued exponential growth of this sector.
Landlords are finding increased demand for flex offerings. Traditional landlord-operator lease agreements are giving way to a range of models that change risk and reward dynamics for both parties. Some landlords are even introducing flex offerings under their own brands. Investors’ support for this new form of real estate income will ensure further growth of the sector.
This report explains how flexible offerings have caused a structural shift in the US real estate industry. It also explores potential growth opportunities and the sector’s likely prospects in a recession scenario.