Why Every Office Will Soon Be Flexible

The 5-year office lease will soon be a thing of the past.

Commercial tenants want flexibility in their office space, and restrictive, long-term leases don’t cut it for today’s agile workforce. Credit the rise of remote workers, freelancers and workspaces, widespread adoption of collaborative technologies, among other factors. The space needs of new companies fueled by venture capital investments, in particular, constantly shifts with acquisitions and fast-paced growth.

Luckily, disruption has arrived in the commercial real estate market. It began with shared workspaces – the cool, mostly urban spaces filled with entrepreneurs and startups sitting beside one another and sharing post-work beers from the common-room keg. But in the past two years, disruption has spread to what’s known as agile office space. At Knotel, for example, we offer tenants flexible short-term leases that allow them to expand and shrink on demand with no financial penalty. We also provide a wide range of office services, from interior designers and custom build-outs to managing the day-to-day needs like WiFi and refilling the coffee.

With agile office space, it’s not about finding cheap space for laptop-tapping entrepreneurs and creatives. It’s about crafting nimble, custom, flexible and premium space for entire companies and large teams.

The arena of agile office space is still new, with about 5 percent penetration in New York City. The average lease period has been compressed to five years, and real estate services firm JLL projects that about a third all office space globally will be flexible by 2030.

With agile office space, tenants can make decisions on the fly, easily scaling up or down on short notice without worry of punitive financial obligations. Companies only pay for the square-footage they use, unlike traditional leases that lock companies financially for the space they rent, regardless of whether they are using it all. If the market continues its pace of growth, companies may soon be able to bid farewell to long-term leases.