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ALLWORK.SPACE KYR SURVEY 2022
Home Business

Corporate Adoption Of Flexible Workspace Is Rising: 6 Ways To Future-Proof Your Space

by Cecilia Amador de San José
November 28, 2018
in Business
Reading Time: 6 mins read
A A
ways to future proof your space

As corporate take-up of flexible workspace rises, here are 6 ways operators can future-proof their spaces in the coming years.

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  • A new report argues that companies who fail to put space at the heart of their strategic agenda are failing in business.
  • The proportion of corporate occupiers who currently utilize flexible space is set to almost double by 2021.
  • Knight Frank has identified 6 key trends in the flexible workspace industry that will help operators make it or break it in the coming years.

Knight Frank recently published the first edition of the report “(Y)Our Space: Insights from the Global Workplace”. The report argues that if companies fail to put space at the heart of their strategic agenda, they are failing in business.

According to the report, one way to make sure space is at the heart of a company’s strategic agenda is to look at real estate as “a fluid and flexible service and not a fixed physical product”. In other words, the report confirms that the flexible workspace industry is here to stay.

Much of this is being driven by the global war for talent. Speaking to Knight Frank, Virginia Clegg, Senior Partner of DAC Beachcroft, stated that “the war for talent and our ability to attract, retain and develop really talented people to serve our clients is absolutely key for us, and does help to frame our thinking in relation to real estate. Clients (and staff) want high quality, value-added services.”

Coworks

Companies not only want to retain talent, they also want to make sure they are being productive. Flexible workspaces have caught the attention of various large corporates as they are recognized as spaces that drive productivity by strengthening the interaction between people and property.

“Corporate real estate initiatives must seek to bolster productivity by increasing the attraction of the workplace and, via that attraction, raise the utilisation and occupancy of the space rather than simply taking space away. Productive work derives from the creation of a positive, well-serviced and well-supported workplace environment.”

So, why flexible workspaces?

Knight Frank identified 6 key elements that appeal to office space occupiers.

  • Flexibility. “55% of the global corporate real estate leaders we surveyed regard the flexibility of coworking as its primary appeal.” In an ever-evolving, competitive business environment, companies are seeing the need to shorten business planning horizons and their ability to pivot quickly to market demands. In order for them to be resilient in their operations, they need to be resilient and agile with their real estate and their costs. Flexible workspaces hit the right spot.
  • Align space to need. Flexible workspaces allow companies to grow or contract as needed; they only take and pay for the space they need and currently use. Flexible workspaces reduce overhead costs by allowing companies to get rid of underutilized space and provides them with a solution that can support them as they scale up or scale down.
  • Community and collaboration. Two of the main pillars of the coworking movement are elements that modern companies value. The design of flexible workspaces have been proven to encourage collaboration and interaction among workplace users. Operators “use design and fit-out to promote the cross company collaboration that is so central to corporate creativity and innovation.”
  • Customer service & engagement. The flexible workspace industry prides itself in placing hospitality at its core. Flexible workspaces are great at customer service, at getting people engaged, and at providing a workplace experience that centers around happiness, wellbeing, satisfaction, and productivity. Customer service is an amenity, one that helps operators stand out from the competition.
  • Well-being and amenity. Flexible workspaces have led much of the discussion around workplace wellness. They have also set a new standard for workplace amenities, coffee, access to fitness space, healthy snacks, etc. “These amenities underpin the sense of community generated within the workspace and bolster the experience in support of productivity.”
  • Data-driven optimization. “Data is the life-blood of digital business.” Various flexible workspace operators are using data to help enhance and improve their workplace experience. This data helps them in making decisions such as which places they need to activate, where there is low utilization, what time people use their space the most, and others. Additionally, these insights help operators make informed decisions about future locations.

According to Knight Frank, “the proportion of those (corporate) occupiers who have between a fifth and half of their occupied portfolio in coworking, serviced or flexible space is set to increase from 27% today to 44% within the next three years.”

As you may know, the flexible workspace industry has experienced incredible growth over the past couple of years. The industry has also evolved in order to meet new client needs and demands.

The industry will continue to grow and evolve. Knight Frank has identified 6 key trends in the flexible workspace industry that will help operators make it or break it in the coming years.

  • Operators shifting to ownership. “Well capitalised operators are increasingly competing with conventional investors for prime assets within key cities in order to build global platforms.” Operators  purchasing buildings include Novel Coworking, Office Space in Town, WeWork, and others.
  • Market consolidation through acquisition. The industry is already experiencing increased M&A activity. Flexible workspace operators should think about different exit strategies and consider whether acquiring or getting acquired is beneficial to their success. Notable acquisitions in 2018 include: WeWork’s acquisition of NakedHub, Industrious’ acquisition of Assemble; Ucommune’s acquisition of Fountown, Wedo, Woo Space and New Space; and International Workplace Group’s (IWG) acquisition of BizDojo.
  • Scale-up and repositioning of traditional brands. “Some traditional brands that have strong market presence will undergo a brand and service refresh.” We have already seen the first part of this, with various established operators rebranding and changing their names. Others have started to roll out a new line of services, like International Workplace Group with Spaces and WeWork with HQ by WeWork.
  • Differentiation through specialization. In a growing and crowded market, flexible workspace operators are leaning towards niche and specialization in order to stand out from the competition. We’ve seen the rise of medical coworking, cannabis coworking, music coworking, female-focused coworking spaces, and plenty others.  (Suggested reading: “Generalisation will Get You in Trouble”: the Case for Niche Workspaces and Why Niche Spaces are Racing Ahead of the Competition)
  • Enterprise and managed solutions evolve. “Operators are targeting larger corporate occupiers either to house special project teams within coworking environments or by offering fully-serviced, managed solutions to corporates on a floor or building level.” These management agreements are also happening between landlords and flexible workspace operators. An example of the former is WeWork and IBM’s partnership, and an example of the latter is Industrious partnership with Rubenstein. (Suggested reading: Are Management Contracts the Future of the Flexible Workspace Industry?).

  • The rise of alternative spaces. Flexible workspace operators are now facing competition from retailers, leisure operators and hoteliers who are “all utilising their spaces to create touchdown spaces for transient workers”. Examples include Office Depot launching its own coworking space inside stores, the Bank of New Zealand’s own coworking space, Eaton Workshop – which includes a hotel and coworking space, and Tryp by Wyndham’s Nest.
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Cecilia Amador de San José

Cecilia Amador de San José

Cecilia Amador de San José, Senior Associate Editor of Allwork.Space, is based from wherever her laptop is. She enjoys traveling and visiting new flexible workspaces. If you'd like Ceci to check out your workspace, feel free to reach out to her at [email protected] (and send a plane ticket).

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Future Of Work Podcast

61 Episode
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Nasim Köerting of The Office Group | Embracing the New World of Work Through Design

February 24, 2022
29 min
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Larry English of Centric Consulting | The Remote Work Revolution: A Better Way to Live and Work

January 13, 2022
34 min
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Award Winning Author & Physician | Dr. Saundra Dalton Smith on The 7 Types Of Rest We Need To Thrive

January 6, 2022
36 min
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Tori Shepherd of The WELL Building Institute | The WELLness Building Revolution

December 15, 2021
30 min
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Kelly McEachern of Perkins&Will | Identifying Workplace Personas To Design Better Human-Centric Spaces

December 9, 2021
26 min
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