Evolving Needs of Flex Space Occupiers

Flex space industry growth has undeniably been accelerated by a major shift towards more flexible work models. Last year, 45% of office workers were hybrid, splitting their time between home, the office, and third places, reports Ipsos Karian & Box. Times are changing, bringing new expectations around the purpose of the office. At the recent GCUC UK London, the panel discussion: “Evolving Occupier Needs in the Flex Space Market,” offered valuable insights into the transforming expectations of flex space occupiers. This article shares some of their conversations while exploring this topic further. 

Corporate demand

Since return-to-office discussions began, corporates have shrunken their office footprints, taking up smaller, more suitable space in flexible workspaces. In fact, today’s corporate office setup ranges wildly – from a fully kitted out HQ in company branding to a couple of desks leased in a local coworking space for employees working near home. In most cases, the space is managed by a workspace operator. 

The evolution of flexible workspaces is largely driven by corporate demand, which embraces flexibility and hybrid work. Nowadays, it’s not unusual for a corporate office to have more employees than desks, supported by flexible workspace management software for booking desks, meeting rooms, and phone booths (the latter is what Greg Miley, Vice President at Desana, viewed as “crucial” in a flexible workspace). 

Like corporations, SMEs, startups, and freelancers are all attracted to coworking spaces for their shorter-term and more flexible contracts. According to Savills, the average lease in mainland Europe is five years, with a three-year break clause. 

Hotelification of the office

Gone are the days of desks and cubicles – breakout space is part of the hospitality-infused offering in flexible offices. The term ‘office hotelification’ was dubbed a buzzword for 2024, describing beautifully designed spaces, high-quality and comfortable soft furnishings, and ambient lighting that seamlessly blend workstations into hotel lobbies and breakout spaces into lounge areas. 

Indeed, the workspace has shifted dramatically from humble beginnings as a place to work, into an experience that attracts and retains talent in a competitive job market. Often, corporate offices come with amenities that are indicative of company culture. For example, a business prioritising team building and strong social connections will have an office with communal seating and breakout spaces to encourage collaboration in the workspace. A company aspiring for a healthy and fit workforce will have a workspace with gym and leisure facilities, which might come with workout programmes, personal trainers, or a sauna. 

While coining this an “amenity race,” moderator Danny Babington, Global Lead – Agent & Broke Partnerships at Mindspace, asked whether operators are going too far with certain amenities. Well, unless your workspace is based in the Nordics, a sauna might be unnecessary, and unwanted amenities might deter workers from the office. 

Workspace doesn’t just come down to amenities, explained Amy Taylor, International Partner, Head of Flex Office Advisory UK at Cushman & Wakefield. First and foremost, operators must nail the fundamentals of workspace – having good WIFI connectivity, providing a hospitable service, and including comfortable and ergonomic furniture. Amy aptly explained: “The brief of today will not be the brief of tomorrow.

Neighbourhood spaces

Bar bookable meeting rooms and phone booths, many neighborhood workspaces don’t include the additional amenities, as they don’t want to take business away from gyms, Yoga studios, cafes, hairdressers, and other services in their local ecosystem. Partnering with local businesses, and providing members with discounts, incentivises access to those facilities and is another strategy to attract people into the office. 

Greg said: “People are intentional about when they use the office” – a worker isn’t going to commute to spend their day taking calls and online meetings in the office. Typically, office days are planned around additional activities – workouts in the gym, getting their hair done at the salon down the road, or having lunch with a coworker, for example. This approach to the physical workplace reflects current lifestyle habits blending work with casual and social aspects of life

Niche space market

But, workspace doesn’t just exist for corporates or white-collar workers. In recent years, niche coworking spaces have opened for creatives, like The Handbag Factory in Vauxhall, and the Impact Hub network for social impact leaders. Defined by the industry and target audience they’re serving, niche workspaces have been fitted out with the equipment and amenities to facilitate that particular demographic. 

Techspace COO, Robert Stevenson, suggested that operators ought to niche on customer segment, as long as it's not “too left-field” or alienating anyone, added Danny. A one-size-fits-all approach just doesn’t work anymore – and operators must work with occupiers to understand what they need in a space, tailoring it to suit their needs.  

Hospitality is really all about service

So, what are flex space occupiers looking for right now? Well, one thing is certain – excellent service goes a long way. Designing a great workspace is all well and good, expressed Niamh Martin, MD at Covene, but what it really needs is a level of hospitality at its very core, otherwise you only have “a beautiful building without a soul.” 

In a challenging economy, where workspace expenses are often the first to be cut as costs rise and churn is common in an industry built on short-term leases, how can operators increase rates while retaining their existing customers? Amy advised that operators deliver an amazing service throughout tenancies, not just when the time edges closer to renewal, and maintaining good customer relationships. Robert suggested a thoughtful ‘value-based pricing model,’ agreeing that first-rate hospitality and account management justifies prices. 

Ultimately, nurturing relationships between occupiers and operators is an ongoing process, helping occupiers feel part of the community and a sense of belonging. In the next few years, those relationships will likely continue to improve. Equally, occupier growth works hand in hand with operator scalability – building great relationships and creating spaces that suit occupier needs is a huge win-win on both sides.