The flex-office sector has evolved through the pandemic, gradually shifting to rely more on large companies as users of flex space than on startups and individuals, according to a new report from CBRE. Flex space’s versatility also has made it a frequent option for companies striving to accommodate new changes in how they use office space.
Nationally, the flex sector, a rapidly expanding niche prior to the pandemic, has slimmed down since early 2020. Denver’s flex market contracted 244,000 square feet, the sixth-greatest loss among the 49 markets studied in the report. Yet Denver remains the ninth-largest flex market overall, home to 2.6 million square feet of flexible office space, and it is the seventh-most penetrated with flex representing 2.2 percent of overall office supply.
“Flexible office space can play a valuable role in a company’s real estate portfolio. It provides a nimble way to expand and contract, which is never more important than now, as companies implement hybrid work strategies and assess how their employees will use the office moving forward,” said Katie Kruger, senior managing director and Colorado market leader, CBRE.
Having reset itself, the flex sector is poised for growth this year in both physical occupancy levels and square-footage gains as big companies increasingly embrace the format’s versatility to handle changing staffing levels and fluctuating office attendance. A CBRE survey of 185 U.S.-based companies found that large companies anticipate adding more flex space to their office portfolios. Last year, nearly a quarter of the survey’s respondents had a significant portion (more than 10 percent) of their office portfolio in flex space. By 2023, half expect to be at or past that threshold.
To that end, major flex-office providers recently reported gains in their business with big companies, or enterprise users.
Different Flavors of Flex
CBRE defines flex space to include multiple formats of office space leased for shorter-than-traditional terms. That includes coworking, which often entails communal desks and common areas used by a flex operator’s occupants. But it also includes faster-growing models, such as private suites and enterprise offerings, which dedicate offices or entire floors for exclusive use by individual companies.
Among flex options that have gained traction as companies experiment with new work arrangements are the core-plus flex model in which users occupy long-term space and flex space in the same building or campus, and subscription-based services that allow employees to work from any of a flex provider’s locations across the market, country or globe.
“The flex industry matured in the past two years,” said Christelle Bron, leader of CBRE’s Americas Agile Real Estate Practice. “Building owners now are far more involved in facilitating flex options in their properties, sometimes providing flex space on their own without a third-party manager. Companies can choose from a variety of flex options to suit their office needs. And flex providers are expanding into secondary markets.”
To read the full report, click here.
Visuals courtesy of CBRE
