LiquidSpace recently published its Q3-2017 US flexible workspace market report. Titled “Core and Flex: The New Dimensions of Office Tenancy”, the report establishes some of the key scenarios driving the increased demand of flexible workspaces and also addresses the key requirements that workspace operators need to meet in order to close enterprise deals.
Increased demand for flexible workspaces is the result of larger companies recognizing the benefits of workspace-as-a-service. Long gone are the days of coworking and shared spaces as hubs for freelancers and entrepreneurs only. CBRE Americas Occupier Survey indicated that 65% of enterprise companies plan to incorporate coworking into their portfolios by 2020. Part of this is due to global trends influencing the way people work and the way companies operate.
It’s also due to the fact that we live in a fast-paced world powered by technology. Companies succeed faster, but they also fail faster, and this has made flexibility a much desired quality in every industry.
“In 1965, the average lifecycle of a Fortune 500 company was 33 years. That lifecycle was down to 18 years in 2013, and it’s projected to shrink further — to 14 years — in 2026,” the report reads. Additionally, “there is a staggering 90% startup failure rate.”
These factors have brought into questions the viability and the efficiency of traditional 10+ year leases, giving rise to corporate coworking. And although larger companies are looking into coworking and shared workspaces, they are not entirely giving up their headquarters (at least not yet).
According to LiquidSpace’s report, there are 4 key scenarios where large companies and enterprises look to coworking as a solution.
Mobility programs allow employees to find a workspace closer to home or to their client’s offices. Companies opt for flexible workspace solutions when offering mobility programs to their employees as it gives management some oversight and control over the type of space that employees choose, while at the same time allowing employees to make better use of their time and be more productive.
2. Agile project space
Flexible workspaces come in handy when companies have projects in different cities or countries than where their headquarters are. These projects can span anything from weeks to months, and more often than not, they end up being extended; so companies need the flexibility that flexible workspaces offer in terms of amount of space and length of contract.
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3. Swing space
“All companies go through a time and need for swing space. The majority occurs when a company embarks on building out a new office space and needs a transition space for several months while the buildout completes.” Swing space, however, is also needed during unpredictable circumstances, such as natural disasters. Flexible workspaces are an ideal solution for companies that have been displaced or are in the process of renovating — they are ready to use offices complete with all the basic amenities, and they can be used for as short or as long as companies need.
4. Regional office space
Satellite offices are key to any growth strategy. Usually companies use satellite offices when they want to test and enter a new market — a process that can take months or years. Depending on the success rate of the company in the new market, the need for satellite space can grow, shrink, or disappear entirely with short notice.
It’s these 4 scenarios that are driving much of the increased demand for flexible workspace by large enterprises. Yet, in order for operators to attract these clients and close these deals they need to offer what these companies are looking and asking for.
Here’s what LiquidSpace found flexible workspace operators need to offer in order to attract enterprise customers to their space:
98% of enterprises said they want flexible contracts
92% of enterprises said they want access to private space
75% of enterprises said they want access to secure space
63% of enterprises are looking for different amenities.
If you’d like to read further findings from the report, click here.