How does flexible space impact property value?
A recent CBRE report shows an increasing amount of corporate and niche spaces claiming a big portion of the U.S. real estate industry.
The U.S. Property Value Implications of Flexible Space report states, “The niche flexible space segment should continue to mature and expand, potentially boosting its share of Class A office space nationally to as much as 10% by 2028.”
CBRE’s report revealed that most flex transactions had cap rates lower than the national and market averages due to operators locating in active markets and high-quality buildings.
High coworking concentrations also have an impact on property value. About 64% of buildings with over 40% of coworking space had higher cap rates.
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Still, there is some risk with incorporating a flex space within buildings. Landlords and investors should be careful and consider their market when deciding how many flex spaces to include in their space.
They should also engage with quality flex space operators in order to increase their income and avoid the risks that come with managing these offices.
Overall, the report summarized that if a building is in a good location and business area, then a moderate amount of flex space will not impact asset values on either end.
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