Flex Space Will Be a Major Component of Future Office Portfolio Strategies

Flexible office space is coming back into the fold. After a rocky year leading up to the pandemic, flexible office space is once again spiking in popularity with the growing prevalence for remote and hybrid work, In short, it is becoming an important part of an office portfolio.

“Today, there are non-traditional portfolio strategies that they are able to deploy to allow them more flexibility, and that is flexible office space. This idea of having fully built-out space with flexibility lease terms where you can go in as a tenant and be quite nimble,” Julie Whelan, global head of occupier thought leadership at CBRE, said in a webinar hosted by CBRE that discussed workplace strategy and occupier sentiment.

Whelan says more and more companies are expecting to incorporate flexible office space to better accommodate employees. “In the next two years, the sentiment is shifting,” says Whelan. The organizations planning to dedicate at least half of their portfolio to flex space has increased 34%. “So, we really think this is an area of the market that is going to grow. Potentially, it will be additive to actual space take up and space demand going forward,” says Whelan.

In addition to flexible space, companies are also moving to more highly amenitized properties. Whelan said the industry is calling this a “flight to experience.” This is happening especially rapidly for companies with a hybrid work that now need less space. In many cases they are taking the same budget and spending it on a smaller footprint in a better-quality building.

The concept of amenities is not what it was before, either. “Companies are looking at the human elements of a space, and they are looking at digital elements and connected technology,” says Whelan. “There are a lot of different elements that are a lot more sophisticated into the types of buildings that employees and employers want to engage with that are differentiating what class-A meant before the pandemic started.”

Georgia Collins, the executive managing director of Americas consulting at CBRE and another speaker on the panel, agreed that she is seeing these preferences when working with clients, but also established that the playing field is still varied. “One-size does not fit all. There is an assumption that everyone is going to end up in the same place, but I think that couldn’t be further from the truth,” says Collins. “When you think about pre-pandemic, organizations occupied space in all sorts of different ways. Some were already working flexibly, and some had in-office expectations. That is where the variation is coming in. How hybrid is being interpreted is varying based on office culture.”