Why are flexible offices a growing hit?

For many companies, office relocation is a very stressful experience. Regardless, the interest association What Works Wellbeing has managed to do this six times in eight years.

The company, which collects and analyzes data on how to improve well-being in the workplace, never signs long-term leases, instead paying to use shared spaces for its London headquarters three days a week. Every month, they have "team days", during which they expand their capacities, rent additional meeting rooms in the building and also tables from neighboring companies.

"We agreed with the teams [of other organizations] that are next to us that we can use each other's premises," she said. Nancy Hey, executive director.

Crash in the commercial real estate market

Hey is a pioneer of the so-called flexible office. While the most recognizable brand in the field, WeWork, collapsed after years of mismanagement, the model it popularized continues, transformed into "flexible spaces."

The concept overlaps to some extent with the concept of “co-working”, but has several different sub-categories: different types of shared offices with different services included, including executive suites and incubators, office “timeshare” and “desks by the hour” ". While "co-working" was initially intended mainly for individuals and start-ups, flexible offices can also be interesting for larger and established companies. They seem to be somewhat suitable for the post-pandemic era: companies are still abandoning fixed workspaces, as remote work is constantly on the rise.

Changes in the way people work have already caused disruption in commercial real estate.

Office vacancy rates in the UK and US remain at record highs, according to research firm CoStar. Some of the declines in value have been spectacular: The largest office building in St. Louis, the former AT&T Tower, which sold for $205 million in 2006, will soon be auctioned off with bids starting at $2.5 million.

Some redundant offices will be converted into apartment complexes, but in many cases this is impossible due to restrictive zoning laws or unsuitable building structures. Therefore, these spaces will have to become offices, no matter what.

New flexibility

Most companies still want office space; very few bosses approve of "full-time" remote work. However, tenants find themselves in a buyer's market, reluctant to sign the five- or ten-year leases that used to be the norm. Companies are looking for new flexibility, often with "shorter lease terms and more freedom to expand or contract overall space," according to real estate consultants CBRE. With tenants' freedom to leave the office at short notice, landlords are under constant pressure to provide attractive workspaces, sometimes equipped with gyms or even childcare.

For the first time, many workers can choose an office whose location and culture suit them, rather than commuting to an office their company accidentally rented years ago.

For now, flexible offices are still a rarity—accounting for just 1.7 percent of all offices in the U.S., according to CBRE.

However, there are more and more such cases that confirm the described trend. Since many employees come into the office only two or three days a week, some companies use the "timeshare model": sharing space with a company that works on different days.

Even in neighborhoods in the suburbs and small towns, "flexible spaces" are appearing, which are intended for workers who no longer commute to offices. These people now work from home, but they don't actually do much of their work from home. Some remote workers have to find a third place because of a cramped apartment or loud children. Employers often help them rent a desk near their home. Spotify, for example, offered employees "membership in a co-working space if they want to work from the office."

Always ready for changes

Hey said this model allowed What Works Wellbeing to move easily when space needs changed, or in one case, when the property manager didn't pay rent and employees came in one morning to find office closed.

They have always shared office space with other organizations, which has led to valuable partnerships.

"In eight years, we had at least six different offices. What we find very useful is to associate with people who are similar to you,” she said.

IWG, WeWork's biggest rival in the co-working space, said it has "begun a massive expansion program and will add 1,000 spaces to its global network over the next year, most of them in suburban and rural locations and often in small towns." ".

These "flexible spaces" in small towns can become centers of local communities - places where people get to know each other.

Some tenants of flexible spaces will be start-ups. The flexibility allows them to start with minimal office costs and then quickly increase them if they grow. Other small businesses may choose to share flexible offices with similar businesses.

"If there are not many of you in the office, it is safer and more interesting to be among people,” Hey explained. A woman working alone late in an empty office can feel unsafe, she added.