Flexible Workspace Leasing Activity Doubles

Flexible workspace leasing is surging. According to new research from CBRE, the leasing for flexible workspaces accounted for 4.4% of the total square footage leased in the first half of the year. That is double the leasing activity in the first half of the 2017, and up from 1% of total leasing in 2013. The research also shows that flexible lease providers have been the biggest driver of growth in the business sector. If this leasing activity continues, flexible lease providers will account surpass the leasing activity of legal, government and insurance sectors by the middle of 2019.

Culture shifts in office and workplace culture and the expectations of employees have been the primary drivers of flexible workplace leasing activity. “Leasing activity is directly linked to an evolution in thinking by occupiers, who are increasingly seeking agility in their real estate portfolios, and thus increasing the demand for flexible space,” Andrea Cross, head of office research of the Americas at CBRE, tells GlobeSt.com. “We have seen Fortune 1000 firms and other major occupiers evolve from ‘I might want to take flexible space’ to “flexibility or agility will be a portion of my total footprint.’”

This leasing activity not only illustrates growing demand from users but also acceptance from landlords. Office owners have been slow to sign leases with co-working operators for fear of volatility; however, that is changing. “As major occupiers have begun to incorporate flex space as a meaningful component of their real estate strategy, landlords have evolved in their thinking and are actively exploring opportunities in this space, whether that’s providing a flex space offering directly to tenants or working with third parties,” explains Cross. “As they determine their strategy in this space, long-term security/risk continues to be an important consideration for property owners.”