NEW YORK CITY—There are more than 300 serviced office locations in Manhattan alone, and globally on a daily basis, three new flexible space offices open every day, according to Michelle Bodick, managing director, sales and marketing (Americas) of the Instant Group, an international workspace consultancy.

In a GlobeSt.com interview, Bodick cited a JLL report that notes although flexible space currently accounts for less than 5% of the current national office inventory, this figure could rise to 30% in 2030 due to tenants' demands. The report also states in 2017 flexible office space grew three-fold to 3.1% in terms of the annual US office leasing activity, compared to two years ago when it was at 1.3%.

2017 marked a significant year for the flexible workspace industry. WeWork's purchase of Lord & Taylor's Fifth Avenue flagship store to relocate its headquarters jolted brick-and-mortar retail with its statement of disruption. WeWork increased its space at its Midtown office at 575 Fifth Ave. It won a $4.4 billion investment from SoftBank, while WeWork India received $15.6 million from the Embassy Group.

Last year also saw Blackstone's $640 million purchase of The Office Group, which provides workspace in 36 buildings in London.

Following London, New York City has the highest number of flexible workspaces. However, flexible spaces also gained momentum in California, Texas, Georgia and other markets.

The Instant Group was founded in 1999, and Bodick has observed that over the years, attitudes and perspectives have evolved regarding the less traditional office arrangements.

“It's not like 'I've got this cubicle and I'm going to be here for three months,' anymore. People like the space and like to interact with the space. They like the sense of community,” says Bodick. “The providers have a lot to offer and that's the goal.”

Bodick broke down the overall flexible workspace market into three categories:

(1) Serviced offices have specialist operators who manage and rent fully-equipped individual offices or floors to companies on a per desk rate.

(2) Co-working is a shared environment, commonly used on a membership basis by individuals who can be from different companies, working side-by-side. Users may rent a desk, coming in and out a few days a week or a few hours each day, depending on the arranged structure.

(3) The hybrid space is both co-working and serviced offices within the same building.

The Instant Group assists clients ranging from individual entrepreneurs to massive corporations including Amazon, American Express, Centrica, Huntswood, Sky and Texas Instruments.

Entrepreneurs or growing companies may have capital expenditure constraints or may not have the financial balance sheet, or a predictable headcount such that they can take out a traditional office lease.

Larger established corporations have turned to the Instant Group when testing new markets, transitioning during downsizing, or relocating prior to a new headquarter location's availability.

Expanding headcount often determines a temporary or longer-term tenancy. “Five years ago, the average tipping point from turning flex-space into a lease was probably 16 people. Now, it's more like 50 to 75 people, and it can be even higher, even 200,” says Bodick.

Encouraging companies to move to new locations can sometimes help recruit a younger generation of millennial talent. Last year, IBM, once a symbol of staid, corporate culture, rented out WeWork's entire building at 88 University Place in Greenwich Village.

Bodick emphasizes that millennials are transforming the way companies work and the nature of the workplace. They want to enjoy where they are. Thus, companies need to offer more than just a desk and the internet.

In response, many flexible workspaces provide an opportunity for customization and branding.“The collaboration and ability to hop in on some new trends with some great technology and a sense of community,” says Bodick. “Why wouldn't you take advantage of that instead of having to build it and do it on your own?”

Instant Insights /

Flexible Workspaces Continue to Grow

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