SAN DIEGO—Downtown has become the choice location for Millennials to live, work and play, so flexible-office space has exploded there to meet the growing demand, JLL EVP Richard Gonor tells GlobeSt.com. According to the firm, co-working, executive suites and incubator-space operators are increasing their presence in urban markets, and Downtown leads San Diego County, with 15 companies totaling approximately 261,000 square feet.

Flexible-office companies such as Regus, WeWork, Barrister Suites and Premier Business Centers are providing one-stop-shop work environments, accommodating the evolving needs of entrepreneurs, freelancers, remote employees and small-business owners, JLL says. And, flexible-office companies are popular in the live/work/play high-density areas like Downtown San Diego. With the Convention Center, Trolley Line extension and 4,000 new condo units under development, Downtown is attracting all types of working professionals.

Additionally, Millennials make up 40% of Downtown San Diego residents that are between the ages 18 and 34, and downtown flexible-office space provide Millennials with the communal amenities they want, pointing to additional growth in this sector and impacting commercial real estate markets.

We spoke with Gonor about why flexible office is so popular in cities, how well it is doing in suburban markets and the type of office space that is least popular in Downtown San Diego.

GlobeSt.com: Why is flexible office an urban phenomenon?

Gonor: Downtown has become the choice location for Millennials to live, work and play, so flexible office space has exploded there to meet the growing demand. San Diego is the number-two US city for Millennial population, with 28% in this age group. In Downtown San Diego, the Millennial population concentration is even higher, with approximately 35% in this age group. In today's economic environment, we're seeing a big portion of this age sector working at start-ups and innovative companies. These newer, growing companies have been the primary targets on which flex-office landlords are focused.

GlobeSt.com: How likely is this type of space to catch on in the suburban market?

Gonor: While Downtown holds the largest footprint for flex office in San Diego, it has already reached the suburbs to meet the growing demand, especially around coastal communities where there is a larger population of Millennials, such as Pacific Beach and Encinitas. We are also seeing flex office branching out into the more traditional suburban-office markets such as UTC, Sorrento Mesa and Mission Valley.

GlobeSt.com: What type of office space is least popular in Downtown San Diego?

Gonor: Buildings with outdated/obsolete improvements (commodity space) and that aren't amenitized continue to lag behind those projects that have adapted to the changes occurring in workplace strategies. The sooner these landlords embrace the importance of highly engineered space, the more attractive their assets will be.

GlobeSt.com: What else should our readers take away from this report?

Gonor: Many smaller tenants move office locations every 18 to 36 months, so flex office has become the on-demand solution when longer-term leases aren't practical. Originally pioneered by start-ups and entrepreneurs, a growing number of companies, large and small, are exploring the flex-office concept. Companies are using flex-office space as a vehicle to support the wider strategic agenda around collaboration, innovation and flexibility as well as talent attraction and retention.

Instant Insights /

Why Flexible Office Thrives in Cities

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