The workplace landscape is changing, and more landlords are recognizing the advantages of flexible office spaces. As businesses continue to adopt hybrid work models, the demand for short-term leases and adaptable office environments is growing. For new landlords, investing in flex space can be a strategic move to meet this demand and secure a strong position in the commercial real estate market.

Understanding the Demand for Flex Space

Businesses today need more flexibility in their office arrangements. This is driving a surge in demand for flex spaces that offer shorter leases and the ability to scale up or down as needed. British Land’s Storey concept is a prime example, having experienced a significant increase in demand in late 2021. Similarly, the Canary Wharf Group launched MadeFor, a flexible office service in London, with Citigroup as its first tenant. These examples highlight how flex space is becoming an essential part of modern office strategies.

Advantages of Flex Space for Landlords

1. Attracting a Broader Range of Tenants

Flex spaces cater to the needs of various tenants, from large corporations to small businesses, all looking for adaptable office solutions. This broad appeal allows landlords to attract a wider range of tenants who prefer move-in ready offices without committing to long-term leases. Companies like Itaú, Brazil’s largest private bank, and the global brand-building agency Genflow have opted for flexible spaces to better suit their evolving needs.

1. Expanding Income Streams

Investing in flex space opens the door to new and diverse client groups. Smaller leases, especially those under 1,000 square meters, are increasingly moving towards flexible arrangements. This shift provides landlords with a steady income stream from a variety of tenants, making it a financially sound investment.

1. Maximizing Value in Prime Locations

The location of flex space is crucial to its success. Properties near major transport hubs and in high-demand areas attract quality tenants who are willing to pay a premium for convenience. This focus on prime locations ensures that flex spaces remain desirable and profitable, as noted by Alex Colpaert of JLL: “There’s a flight to quality in the current office market, and so best-in-class locations, with plenty of amenities, will more than ever be in high demand.”

Navigating Challenges in Flex Space Investment

While the benefits are clear, new landlords may face some challenges when entering the flex space market. Managing multiple tenants with shorter leases requires a different approach compared to traditional office leasing. This often involves a cultural shift within the management team, as operating a full-service flex offering is more similar to running a hotel or hospitality business.

For those new to flex space, partnering with experienced operators can help bridge the gap. These partnerships provide the operational expertise needed to manage flex spaces effectively, allowing landlords to focus on maximizing their investment.

Positioning for Success

Investing in flexible office space is more than just a response to current trends; it’s a strategic move that can provide significant long-term benefits. By offering flexible solutions, new landlords can meet the needs of today’s tenants, diversify their income streams, and enhance the value of their properties. Despite the challenges, the potential for strong returns and a competitive edge in the market make flex space a smart investment for the future.