Five stats from JLL, CBRE, Colliers, and Savills on the future of flexible workspace

There is no shortage of opinions and prognostications on the future of the flexible workspace industry. While 2020 was undoubtedly a rough year for the entire commercial real estate market, there is plenty of reason for optimism for flex enthusiasts.

JLL still predicts that 30% of office space will be consumed flexibly by 2030, although they concede it may happen “in a different form than it took before the pandemic.” Check out what some of the other major commercial real estate players are saying when it comes to flex.

Colliers: Business Flexibility Is On The Rise

In a recent Colliers Occupier Services poll, more than 90% of respondents projected lease flexibility will increase in the future. Of these respondents, 25% believed this will take the form of more flexible workspace agreements, with another 44.5% indicating that greater flexibility will be built into traditional leases.

The report goes on to say that "the emerging consensus supports the theme of a more flexible future. For operators who can weather nearterm occupancy shortfalls through prudent financial management, lease restructuring, and reactive new products and services to retain members, there may be a very bright future ahead.

Our CEO Amol Sarva had a chance to contribute to the research. "If Flex 1.0 was about where people work, Flex 2.0 will be increasingly centered around how people work," said Sarva. Office and workspace flexibility will encompass much more than just space needs and lease duration, it will now incorporate a holistic understanding of how a company works and optimize for the employee experience.

JLL: Office Leases Are Shrinking

A heated debate has arisen about the future of work, the (greatly exaggerated in our opinion) death of the office, and the role of workspaces in a post-pandemic world. While there are certainly merits to both sides of the debate, one thing is becoming increasingly harder to defend: long-term leases.

‘The trend toward shorter leases is riding an accelerated trajectory as office users exercise caution and avoid making long-term decisions in the age of COVID-19,” says Ben Munn, Global Flex Space Lead, JLL.

According to JLL, office leases continue to drop across the globe. In Hong Kong, an average office lease lasts 3 years. In the U.K. it’s six. In the U.S., it fell 15 percent in the first five months of 2020 to seven years -- and it’s likely to fall farther.

CBRE: Flex Office Has Been Growing Annually At 34%

Though the flex office market comprised just a sliver of the broader commercial real estate market in 2019 (approximately 1.8%, according to CBRE), it has been growing at an annual clip of around 34%.

According to a recent CBRE post:

"Flexible office space is no longer seen as a niche sector but as a strategic solution for a broad range of companies. As this shift unfolds, certain structural changes in the way flexibility is being delivered to the market are underway.

Strong players and alliances between flexible office operators and building owners are emerging, new markets are being explored and new business models are being developed to engage office users. The upheaval that has defined 2020 will lead to the evolution of the flexible office industry to a more mature state in the years to come."

JLL: Flex Office Is Still A Huge Market

JLL’s projection for the growth of the flexible office sector remains nearly exactly what it was pre-pandemic: 30%. According to their recently published “Covid and Flex Space Report”:

"Flexible space demand will continue to increase as a result of COVID-19, although in a different form than it took before the pandemic. In fact, we believe 30% of all office space will be consumed flexibly by 2030. While there are short, medium and long term implications of COVID-19 on the sector, the future of real estate is a spectrum of flexible spaces."

“Given the level of uncertainty with respect to the economy and the pandemic, tenants are seeking more agile office solutions,” says Scott Homa, Director of U.S. Office Research, JLL.

Savills: Flex Office Providers Optimistic Over Long-Term

Workthere Americas National Director Ted Skirbunt said, “With the novel coronavirus outbreak embattling many US cities, it is not surprising that the results of our July sentiment survey show decreased optimism over the short-term to 30% in North America, compared to 59% in May. However, 61% of providers are optimistic about the flexible office sector over the long-term.”

The Global Flexible Office Provider Sentiment Survey by Workthere collated 92 responses from a variety of providers in 12 countries across the world to understand their position and plan moving forward, as well as their sentiment on what the short-term and long-term pictures look like for the flexible office sector.