Exploring the Flexible Ecosystem

Nothing happens in a vacuum, and seismic changes in how companies find and occupy office space have already set off ripples throughout the CRE industry. If we style this changing industry as a glorious new ecosystem unto itself, then flexibility is the amoeba at the root of it all. What this means is that all of CRE’s key players stand to benefit from flexibility, often in a mutual capacity. Here’s a high-level overview of how it works.

  1. The pace of business is meteoric compared to just 10 years ago, meaning that companies no longer have the luxury of planning their space needs far into the future.
  2. This, in turn, means that more and more companies are demanding flexible options.
  3. To offer flexible options, tenant brokers reach out to flexible office providers to see what spaces they have available.
  4. If a provider doesn’t have available supply to meet the company’s needs, they reach out to landlords to find a space that does.
  5. Landlords lease space to flexible providers in order to stay competitive and attract top-tier tenants, who increasingly demand flexible options.
  6. And the cycle continues: as a flexible provider grows its clientele, it can offer better terms to landlords, who can offer better deals on spaces in return. Better deals = more space = more clients = better deals = you get the picture.

This is just the tip of the iceberg, however, so let’s take a closer look at the symbiosis of key players in the flexible office movement.

Tenant Companies

Remember when Segways came into our lives and completely revolutionized the way we move around cities? Yeah, neither do we. The point being that some ideas make so much sense that once they enter the mainstream, we wonder how we lived without them. Others become punchlines, like the preferred mode of transportation for mall cops. Flexible office space falls into the former category. Companies no longer have to sign capital-intensive long-term leases to get the office space they want, and this flexibility makes a lot of business sense. According to JLL, by 2030, over 30% of the office space market in the U.S. is expected to be “consumed as flexible space,” indicating that this is one genie that can’t be put back in the bottle. With a flexible office provider, companies get a full-service office space with better terms on an expedited basis.

Brokers

Flexible office providers and brokers go together like cheese and crackers, like Batman and Robin, like Wayne and Garth. Flexible office providers will always rely on tenant-side brokers, whose clients are increasingly looking for the best spaces with shorter term lengths. It’s a partnership that can go the distance: imagine how the technology that flexible office providers use to optimize and streamline processes could be applied to a broker’s workflow. Imagine how much time and effort that would save, enabling the broker to close even more deals. Not to mention that brokers also get commission on office space renewals and expansion, which obviously happen a lot more frequently in the flexible realm than in traditional leasing.

Landlords

Which brings us to landlords. The simplified outline above begs the question, why are flexible office providers even in the picture. Can’t landlords just offer flexible terms to tenants directly? The short answer is, sure, they could — but it wouldn’t make a lot of sense.

The business of owning space is a lot different than the business of building and operating space. Most landlords have better uses for their capital than getting involved in tenants’ branding, tailoring, and workplace strategy needs — not to mention the day-to-day management of spaces after move-in. Flexible office providers, on the other hand, have this down to a scalable science.

Simply put, flexible office providers bridge the gap between the office space that companies need and the flexibility of terms that they demand. What’s more, they are bringing to bear cutting-edge technology that can be used to make buildings more efficient, more comfortable, and more profitable. Landlords stand to gain a lot from the type of successful tenants that engage flexible office providers, including higher rents, increased property value, and the benefit of becoming even more attractive to other successful tenants.

Conclusion

Suspect biology metaphors aside, there is a dynamic and evolving system at work here that stems from a growing expectation of flexibility in CRE. Tenants want it, brokers must source it, and landlords need to get on board to stay attractive to prospective clientele. And, the best part — everybody wins. If you want to hear more about the revolution of the CRE industry, check out this exclusive event on May 30.