The State of the Flexible Workspace Industry: A Look Back and What to Expect in 2025
As we reflect on 2024, it’s clear that the flexible workspace industry has continued its remarkable evolution, driven by changing workforce dynamics, technology, and shifting corporate strategies. This year has been a critical juncture in refining how businesses operate, with many companies solidifying their hybrid work models, rethinking their real estate needs, and reimagining the future of collaboration. Let’s take a closer look at the trends that defined the flexible workspace sector in 2024, and what we can expect in 2025.
2024 In Review – Trends Amongst Preferred Office Network Clients
Here at Preferred Office Network, we saw a marked increase in demand from our enterprise clients seeking flexible workspace solutions and a shift in the types of requirements received. Historically, small private offices were the most requested office product, but this year we fielded more requirements for larger headcounts and team spaces. Companies were looking to relocate teams out of traditional space or have teams use space in a hybrid fashion shared among multiple employees using the space part time. Our recent case study highlights more about how large companies are leaning into flexible workspaces to solve for a variety of challenges the traditional office model can’t overcome.
Another noticeable change was a decrease in the demand for month-to-month lease terms, which Preferred Office Network typically offers. Many opted instead for 12 or 24-month terms and leveraged these longer terms to negotiate lower lease rates. We’ve also seen more flexibility with annual rent increases. Where a client would typically see a 6% increase to their rent each year, operators in our network were willing to offer increases in the 3-4% range to encourage their valuable clients to remain in their spaces.
Preferred Office Network’s standard office agreement is all-inclusive and includes furnishings, internet, reception, mail and package handling, kitchen access, phones and phone answering, and four hours of monthly meeting room usage. Slowly over the years the need for physical phones in offices has diminished, and 2024 was no exception. What we did see being requested more often were locations with phone booths (we are big fans of ROOM products) to make private calls, especially when a team space is being utilized. Free on-site parking was another sought after amenity we saw come to the forefront in decision-making. On-site staffing and reception services are still critical needs as well.
Some clients became more price-sensitive than they were in the past, so it has become even more important for a flexible workspace operator to demonstrate the value of the space and services included in their monthly costs and to be transparent about any additional fees that could come into play.
Suburban markets continued to dominate our client requests, with the southern region of the United States consistently being the most requested area of the country. While flexible workspaces have traditionally been concentrated in major cities, 2024 saw a noticeable shift towards suburban and regional markets. The demand for flexible workspaces has expanded to secondary cities and rural areas as more workers look for spaces closer to home, avoiding long commutes while maintaining access to professional environments.
Flexible workspaces now more than ever are having to carefully balance supply and demand. In 2024, many of the operators in our network are at nearly full occupancy levels. Occupancy levels can change on a dime due to short lease terms, but these higher occupancy levels reflect an overall positive shift in the market as companies continue to integrate flexible workspaces into their overall real estate portfolio strategy.
A Look Ahead – What Will We See In 2025?
Solving for Space Needs
There is a growing need for more space, but on the same flexible terms companies can get when they only need 150 square feet. When a needs grow closer to 1,000 square feet with headcounts of 20+, they are likely ready to transition out of a flexible workspace environment and into a dedicated suite or space of their own. While there are flexible workspace operators who can offer suites and space within their existing building, many don’t or lack a seamless way to help a company grow within the building they’re already in. We introduced the Preferred Suites concept in 2023, and anticipate this solution to become increasingly available to growing companies as landlords continue to embrace flexible workspace partnerships like never before.
AI, Automation, and Tech
Commercial real estate and technology will merge in new ways in 2025. In 2024, Yardi, a real estate tech company, became a majority owner in WeWork, and this has already helped drive innovation and collaboration amongst operators to make more seamless connections across the world. This naturally is going to advance the opportunities for technology to become more deeply woven into the fabric of flex space as companies have a demand for streamlined solutions.
Artificial intelligence and automation will continue to revolutionize the flexible workspace sector. AI will play an even larger role in customizing experiences for individuals and organizations. From predictive analytics that help operators adjust to market fluctuations to automated space management systems that optimize energy usage and layout, AI will be a key enabler of efficiency.
Automation will extend to the tenant experience as well. Expect more seamless check-ins, smart office systems that adjust lighting and temperature to personal preferences, and advanced virtual assistants that handle booking and administrative tasks. This digital evolution will ensure that the flexible workspace industry remains at the cutting edge of both technology and customer service.
A Thoughtful Approach to Design
Workspaces will transform into hubs for strategic thinking and creative problem-solving, rather than just places to sit at a desk. The blending of physical and virtual environments will reach a new level, as organizations demand that their teams not only meet in person but do so in ways that are inclusive of remote workers. Expect better audio-visual infrastructure, customizable layouts, and spaces that encourage cross-collaboration across geographies and teams.
The office will evolve into a destination designed with purpose as employees crave a meaningful reason to come to work that goes beyond a corporate mandate. As companies compete for talent in an increasingly employee-centric market, these destination workspaces will become integral to attracting top talent. Employees will want to be inspired and motivated by the environments they work in, and providers who can meet these demands will thrive.
The Network Effect
In 2025, the decentralization of the workplace will become even more apparent. As businesses continue to embrace flexibility, the need for localized flex solutions will grow. Companies won’t just rely on one or two main offices; they will distribute their teams across multiple flexible locations, allowing employees to work closer to home or in places that suit their preferences.
Operators will offer more micro-offices and neighborhood workspaces, giving companies the ability to lease multiple locations for different purposes, be it for collaboration, meetings, or focused work. This hyper-local approach to flexible workspaces will be fueled by an increasingly distributed workforce and the recognition that employee satisfaction is linked to convenience.
As Dror Poleg so eloquently put it a few years ago, “The office of the future is not a place. It’s a network of locations that enable people to do whatever it is that they need to do at that moment to be productive and happy.”
Preferred Office Network is comprised of 260+ flexible workspace brands that together can offer companies 1,200+ locations throughout North America and beyond. Together, these locations create a network of vetted spaces enterprise companies can access through a simple Master Service Agreement, consolidated billing and invoicing, and one point of contact.
Conclusion: Embracing Change and Opportunity in 2025
The flexible workspace industry has undeniably reshaped how we think about work and the office. The trends of 2024 have been characterized by innovation, sustainability, and a continued shift toward hybrid and decentralized models. As we move into 2025, these trends will not only deepen but expand, with technology and employee-centric designs playing an even more significant role in defining the future of work.
For businesses, 2025 offers an exciting opportunity to rethink what a workspace can be and how it can support the needs of a dynamic, dispersed workforce. For flexible workspace providers, the key to success will lie in anticipating these changes and staying ahead of the curve in offering spaces and solutions that align with the ever-evolving demands of today’s workplace.