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 workplace well-being, never signs long-term leases, but pays for the use of shared spaces for its London headquarters three days a week. Each month, they hold “team days” during which they expand their capacity, renting additional meeting rooms in the building and also tables from neighboring companies.

“We have agreed with the teams [from other organizations] that are next to us that we can use each other’s spaces,” 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 this field, WeWork, has collapsed after years of mismanagement, the model she popularized lives on, reimagined as “flexible spaces.”

The concept overlaps to some extent with the concept of “co-working”, but has several different subcategories: different types of shared offices with various services included, including executive suites and incubators, office “timeshare” and “hourly desks”. While “co-working” was initially aimed primarily at individuals and start-ups, flexible offices can also be of interest to larger and established companies. They seem to be particularly suitable for the post-pandemic period: 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 that 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; few bosses approve of full-time remote work. But tenants are finding themselves in a buyer’s market, reluctant to sign the five- or 10-year leases that were once the norm. Companies are seeking new flexibility, often with “shorter lease terms and more freedom to expand or shrink the overall space,” according to real estate consultants CBRE. With tenants free to leave the office at short notice, landlords are under constant pressure to provide attractive workspaces, sometimes complete 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 – according to CBRE, they represent only 1.7 percent of all offices in the US.

But there are more and more cases that confirm the described trend. Since many employees come to 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 suburban neighborhoods and small towns, “flexible spaces” are popping up, designed for workers who no longer commute to the office. 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 space because of cramped living conditions or noisy children. Employers often help them rent a desk near their home. Spotify, for example, offered employees “co-working memberships 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 co-working rival, announced that it has "launched a major expansion program and will add 1,000 spaces to its global network over the next year, the majority of which will be in suburban and rural locations, often in small towns."

These “flexible spaces” in small towns can become hubs for 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.