Managed flexible office space – What are our occupier clients saying?

Managed spaces in the world of flexible offices are not a new phenomenon, and over recent years, we have seen more landlords look to enter this particular area of the market by converting their long-term leasing options to their own managed space solutions.

In line with this increased supply, we have seen demand grow, with Workthere data showing the number of managed spaces acquired for our clients double between 2023 to 2024, underlining its increasing importance in the wider office market. The growth has been fuelled by flexible offices now being considered entirely “mainstream” and by tenants looking to move on from all-inclusive shared facilities to their floors while retaining the all-inclusive nature that they are accustomed to. In a recent blog, our Flex Leasing team looked at managed space as a solution, but not always a quick fix for landlords. But what are the benefits for occupiers over a fully serviced space?

Upgrading from fully serviced to managed spaces

Broadly speaking, flexible office demand over recent years has been driven by businesses looking for more hospitality-led or productised environments, with its ease of use via fixed costs and all-inclusive nature. The first step is often a fully serviced space that provides a dedicated office consisting of desks only, with all other amenities, such as kitchens and meeting rooms, part of the wider building. 

Managed spaces are often seen as the “next step” in the flex office market, as occupiers seek a solution with their front door but all the accessories of serviced. For managed spaces, typically everything a business requires to operate, such as desks, meeting rooms, and a kitchen, is located within its own space rather than some of these elements being communal like in a fully serviced space.

As a business grows in headcount, we see our clients wanting to nurture an internal culture and grow the feeling amongst employees that there is a unique identity for the business, which sometimes cannot be achieved in the more community-based flex spaces.

That theory holds particularly for client-facing businesses, which can customise the office to their needs, which often involves increased levels of personal branding and greater control over the customer journey. The ability to have exclusive access to all areas means that a business has more control over the environment it wishes to present to clients. We recently worked with a global real estate investment trust to secure their new home in the West End of London, for whom it was essential to have a whole branded floor, with the extra benefit that it offers the confidentiality that the trust required.

A longer term plan

Of course, there are flipsides to the extra level of control too. Taking on a managed space means that a business will likely lose out on much or all of the communal spaces like breakout areas, although in some cases we can secure space which offers our clients with their own space, but extra building amenity too. Where there is no extra amenity, everything must be incorporated into the managed space, and thus you will be paying for all these areas as they are dedicated, versus a serviced office where the breakout areas are not directly chargeable.

With this finite space, there are growth considerations to take into account. As managed spaces tend to be for whole floors, rather than the scalable fully serviced options, it can be more complex to change sizes during the term. We work with occupiers to look at their growth plans for the whole term, not just its status at the start of the agreement, to ensure they are not left with a space that is impractical for their needs. Where needed, there are shorter term agreements available, if one knows where to look, like the large software company we found a flexible managed space for in the City of London, who required a fixed managed contract to deliver a year-long project.

More convenience

Managed spaces are still highly flexible versus a traditional lease, with the latter requiring an occupier to sign a, typically, longer term agreement with a landlord on top of which the occupier is responsible for everything else – such as utilities, insurance, consumables, cleaning and internet. Thus an extra amount of organization and variable costs to be mindful of.

Attention must be made in particular to the absence of fit-out costs at the start of the agreement and dilapidation costs on exit as part of the managed market, which are highly prevalent within the traditional leasing world. At a time where capital and debt is not cheap to acquire, having a space which is delivered at no direct occupier expense has seen the popularity of managed spaces increase amongst our clients.

Finally, it’s also becoming increasingly common for landlords to be open to just one short-form contract. As more landlords enter the market and competition continues to increase, that process will continue to be streamlined.

Making the right choice

 Client confidence is strong in the managed market, and we are increasingly recommending these solutions as a means of maintaining the benefits of a serviced offices whilst adding their own image to a space.

Additionally, removing the need for capital investment is a primary requirement of clients at present, meaning they can deploy their capital in to growing their workforce, research & development and other aspects more suited to their specific needs.

Our clients’ confidence is demonstrated by the initial term being signed for which, according to our Workthere data, increased by 20% from 2023 to 2024, from 13.2 months to 15.1 months for the initial term taken.

We firmly believe the popularity of managed spaces will continue to grow as the market matures. As long as the right location and space are chosen, occupiers will be in the right place to grow their business.