The Rise of Flex Offices: Creating New Opportunities for Landlords and Property Owners

Flex offices have recently emerged as the cost-saving and flexible alternative to traditional office space. Flex office space allows organizations to adapt and modify their workspaces quickly based on operational needs. Unlike traditional office rentals, flex offices may be leased for the short term or long-term. Flex spaces can easily be reconfigured to suit various tasks and projects.

The flexibility of coworking centers and other types of flex office space are becoming increasingly attractive to not only tenants and businesses but also to landlords and commercial property owners. As market demand shifts, landlords whose portfolios include flex spaces are better equipped to meet increasing demand for flexible, non-traditional office spaces. By investing in flex spaces, landlords can optimize use of square footage and attract a broader range of tenants at a time when the traditional office space market is experiencing all-time high vacancy rates.

In this blog post, we explore the shift to flex office space and the value that flex spaces offer businesses in today’s world of hybrid, remote, and flexible work. We also examine the multitude of benefits flex spaces can offer landlords and how the rise of flexible work is influencing landlords’ property strategies across the country.

What Is Flex Office Space?

In case you’re not familiar, flex office space (also known as flex space or flex offices) is a dedicated workspace that you can lease with flexible terms. Flex offices typically are located in coworking centers, which notably include a wide range of various types of offices, meeting spaces, and workspaces. Flex office options within the Preferred Office Network include private offices, coworking spaces, custom suites, day offices, virtual offices, and meeting rooms.

There are several factors that differentiate flex office space from traditional office space. The first difference is flexibility. Flex offices and other types of flexible workspaces may be booked for the short term (by the day, hour, or week) or for the long term (by the month or year). This is in stark contrast to traditional office space rentals, which often require multi-year contracts and commitments.

Flex offices also offer organizations scalability that can’t be matched by traditional office space rentals. Because flex offices feature short-term leases, businesses can easily expand their office space footprints without facing major financial penalties, as would be the case with traditional office space. When a company expands its workforce or enters a new geographic market, it can easily add additional flex offices to its lease. If an organization is downsizing, workspaces can easily be removed from existing leases as well.

Why Landlords Are Embracing the Shift to Flex Office Space

Over the last three decades, the office space landscape has shifted dramatically as businesses increasingly seek amenity-rich, flexible office spaces that help them control costs and meet evolving employee expectations. Forward-thinking landlords and commercial property owners are starting to understand that market sentiment has shifted. As such, investments in flex offices are on the rise as many landlords recognize that flexibility, choice, and adaptability now reign supreme when it comes to what businesses look for in office space.

Here are some of the most compelling reasons you as a landlord should consider seizing this opportunity to transform your properties into adaptable, flexible, tenant-friendly flex office spaces.

Workers’ Preferences for Hybrid, Remote Work Arrangements

Perhaps the most significant trend driving the shift to flex office spaces is the increasing popularity of hybrid and remote work. According to data published by Forbes, a staggering 98% of workers say they want hybrid work arrangements, i.e. arrangements where they work remotely at least part of the time.

In early 2024, more than 25% of full-time employees already were working in hybrid environments. Hybrid work provides cost-savings for employers and is associated with higher productivity, healthier work/life balance, and shorter commutes for employees. Companies are increasingly turning to flex offices in coworking centers to accommodate this shift in workers’ preferences.

Higher Occupancy Rates in Flex Spaces

Even though the economy has been stable, vacancy rates for traditional offices have been steadily increasing over the last three to four years. In July of 2024, traditional office vacancy rates reached a record high of 20.1%, the highest office vacancy rate since Moody’s Analytics began tracking these metrics.

Flexible office spaces allow for much shorter lease terms, which attracts a broader range of tenants, including sole proprietors, individual practitioners, and small businesses. Attracting a broader array of tenants reduces the risk of vacancies and meets the market’s demand for flexible, scalable offices, which is why flex offices typically have much lower vacancy rates than traditional offices.

Greater Ability To Adapt to Market Changes   

Another reason to embrace the rise of flex offices is that doing so gives you adaptability in the face of future market changes. Coworking spaces are inherently flexible by nature, which means you can easily transform underutilized or unused spaces into the type of office space currently in high demand.

Imagine, for example, that two to three years from now shared office space becomes a hot commodity and is in great demand. You could easily convert unused or underused existing spaces into shared office space to meet the market’s demand.

Fewer Operational Responsibilities in Coworking Setting

With traditional office spaces, you as the landlord are responsible for all aspects of managing the property. This may include maintenance, security, utilities, and staffing expenses. There are a variety of flex office operating models available to landlords that move maintenance, security, cost of utilities, and staffing expenses to third-party flex operators.

Shifting maintenance responsibilities to third-party flex operators ultimately can increase your return on investment and reduce the expenses associated with maintaining flex offices.

Options To Blend Traditional Office Suites and Flex Offices

Preferred Office Network recently launched Preferred Suites to meet a growing demand among enterprise organizations for standalone suites that come with all of the services, amenities, and flexibility of flex offices. With Preferred Suites, tenants can choose between flex offices located within a coworking center or larger standalone space outside of a coworking setting that still feels like a managed space with the services and amenities available in a coworking space.

For a landlord, tenants of a Preferred Suite will be expecting shorter lease terms, likely 12 to 24 months, and this may require a new level of flexibility not previously offered. Landlords can leverage coworking spaces already on-site to better manage and service their standalone spaces. Preferred Office Network can help all parties create agreements that are mutually beneficial and that tie together all of the these elements.

 Key Takeaways from the Rise of Flex Offices: Creating New Opportunities for Landlords and Property Owners

• Flex offices are gaining popularity due to their flexible and scalable lease terms, cost-effectiveness, and support for hybrid and remote work arrangements.
• Landlords are investing in flex spaces to meet the need for hybrid and remote-enabled workspaces, which are massively popular among U.S. workers.
• The benefits of flex offices for landlords include higher occupancy rates and an increased ability to respond to future market shifts.
• Management agreements with flex office operators can increase ROI and reduce expenses.
• Preferred Suites offer landlords the opportunity to blend traditional office suites with flexible offices for their tenants.

For more on the amenities and services typically offered in flex offices, explore “Flexible Workspace Services and Amenities that Raise the Bar.”