What Should Corporate Occupiers be Thinking About When it Comes to Flexible Office Space?

Historically, flexible office space has typically been associated more with start-ups and SME’s looking for coworking space or smaller private desks. While corporates have always used flex offices, this was generally usually more for project space.  However, in today’s post pandemic world, we have seen a fundamental shift in the way that corporate occupiers use flexible office space, often incorporating it as a long-and short-term solution in their real estate strategy.

There have been a number of drivers for this increase in appetite from corporates including the fact that purchasing an outsourced solution such as flexible office space can mean reduced resource commitment. In addition, a corporate real estate portfolio should include all types of space solutions from ultra flexible to traditional leases - in line with evolving business needs and requirements - as the ability to ‘flex’ with greater agility than a traditional lease portfolio can offer, is an advantage in navigating business changes.

When acquiring flex space, in the same way as a longer term lease, it is essential to consider the ‘drivers’ for space, namely employee needs and requirements, client needs, onsite amenities, operator partners, culture and financial stability, as well as market maturity and availability.

So, what are the key factors for corporates to consider when looking to acquire flexible office space?

The plethora of operators 

There is a wide choice of operators offering flex space and no one operator is necessarily better than another, and local and independent flex office providers should be considered alongside larger regional, national or global operators, assuming they are in the right location and have the right cultural fit for you. It is of course essential to carry out sufficient due diligence on operators from a specific property perspective. This will allow occupiers to ensure that their requirements align with the operators offerings in terms of ESG, health and safety guidelines, and more. With ESG as an important example, we are now seeing the likes of Uncommon, Work.life and Huckletree stepping up to support client reporting to aid occupiers in reaching their own sustainability goals, which will become ever more important to the point where it is seen as an essential deliverable by many occupiers.

Location and amenities

Naturally, workspace needs to be accessible for both employees and clients, considering nearby transport links and good accessibility. As the flex market has expanded over the years, sites are now well distributed across urban and suburban locations, providing a great choice in many markets. IWG alone is looking to open a further 2,000 sites over the next five years, and this year we will see Fora, Spacemade, and Huckletree open some exciting new spaces across the UK.

On-site and local amenities have increased in importance, with culture and quality playing a part. We’ve seen a continued demand for ‘luxurious’ amenities in best-in-class spaces with flex operators now offering more than the standard landlord. As occupiers seek to encourage staff to return to the office, the provision of amenities is essential. Flex space often fills the gap between the landlord provision and what occupiers would provide themselves if their office space was larger. As a result, we have seen outdoor space, a variety of work settings, quiet rooms, phone booths and informal space become the norm within flexible office offerings. It is important to choose a space that complements your existing offices to retain the same standard your employees are accustomed to, and one that that is aligned with your business culture to ensure a smooth transition.

Lease type – check the fine print!

With flexible contracts there should be no hidden surprises, and the term and cost agreed is fixed for the contracted period, ensuring full transparency. However, it should be noted that there is no ‘get-out’ clause as such. Contracts are fixed for a certain amount of space and time period, so it is important to commit to a term that is appropriate for your needs. Building extra flexibility into the contract should be a consideration if you think increasing or decreasing the space will be required in term.

Neighbours – who are the other tenants in the building?

One of the key benefits of flex space is that there are multiple occupiers contributing towards a community culture which can be mutually beneficial, bringing a positive atmosphere and networking opportunities. The benefits of this ethos can foster business partnerships and create access to talent.

We expect larger firms to continue to be significant occupiers in the flex market, increasing their share of flexible office space across the globe as a strategy to mitigate risk. There are quite a few things to consider as a corporate looking to acquire flex space, but it’s important to note that the offering in itself is all-encompassing and designed with solutions to save time and resources.