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Office markets around the world are experiencing a rapid shift to a more flexible model that incorporates a broad group of important trends including: co-working, space as a service (SaaS), open play layouts, fewer fixed-desks and walled-in workspaces, higher allocations to amenity space, and risk-sharing between property owners and tenants.
Office owners have rarely been as innovative as many of their own tenants. Now, the time has come to adapt. Much has already been written about flexible office trends and co-working operators, but few of these reports describe the owner/investor’s perspective. That is our focus in a recently completed White Paper: The Rapid Growth of the Flexible Office.
In this paper, we describe how landlord and tenant relationships are changing and how property owners should respond. We analyze the economic trade-offs associated with co-working operators/risk-sharing versus traditional leases. We explore the implications for both cash flow and value changes, as well as how the capital markets are likely to react to flexible office arrangements. We conclude that the drivers of flexible offices are not a fad, but are likely to be a long-term trend, especially in industries with high labor costs and reliance on a younger workforce.
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May 16, 2020
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