U.S. Companies Plan For More Flexible Work Practices
Global property consultant CBRE is reporting this week that the flex-office industry has emerged from the pandemic-induced downturn and is now poised to play a key role as companies adapt their office portfolios to accommodate more flexible work practices.
Flex-office providers have spent the past year trimming excess or unprofitable locations from their networks, resulting in a collective reduction of 10.1 million sq. ft. of flex space across 529 locations in 40 cities in the U.S. and Canada, according to CBRE. The industry now spans roughly 70 million sq. ft. in North America, a roughly 2 percent share of the overall office market.
Now, as flex providers solidify their financial and strategic footing through partnerships and other moves, their offering is gaining new traction. CBRE surveys show that most large U.S. companies favor the short-term flexibility provided by flex space for a portion of their office portfolios as they adapt to new work styles, including hybrid work practices, as part of their return-to-the-office plans. Many flex providers have informally reported record sales volumes in recent months.
"The flex-office sector is weathering a challenging office market to emerge with a bright outlook," said Julie Whelan, CBRE's Global Head of Occupier Research. "Flex-space providers are well positioned to meet the need for companies to accommodate evolving employee work patterns while remaining nimble to change course if needed."
"The flex industry has evolved during the downturn, expanding its services to meet customers' changing needs," said Christelle Bron, Leader of CBRE's Americas Agile Real Estate Practice. "For instance, operators are offering on-demand and desk-pass services, which allow people to use their services whenever needed. These services are providing companies more flexibility in establishing remote work sites for employees who want additional options beyond the central office. We're also seeing an increase in demand for larger flexible office suites and enterprise offerings - entire sections or floorplans dedicated to individual companies on flex terms."
CBRE outlines four primary factors fueling demand for flex space going forward: