A new report from JLL titled ‘The Impact of COVID-19 on Flexible Space’ has revealed that the flexible office sector will see an uptick in demand and expansion. Prior to the pandemic, the market had begun to slow, but companies moving away from risky, long-term leases will likely shift their sights to flexible workspaces.
For now, coworking operators in particular will face the biggest obstacles as many of their core customer base, such as freelancers and startups, will continue to operate from home. However, flexible office firms that provide a hybrid of both long-term commitments for private offices and collaborative coworking spaces will have a better chance of weathering the economic storm.
“Owners will have a growing challenge on their hands in the months ahead, as venture-funded coworking companies continue to default on rent payments in some locations,” said Scott Homa, JLL’s senior director of office research. “This will force important decisions among landlords about how to respond and spur continued evolution of the flexible space sector, most notably in the financial structure of deals—fewer long-term leases and more revenue-share/management agreements.”
Operating completely remote may be the ideal scenario for a few companies, but the world’s largest work-from-home experiment has proven that this arrangement is not for everyone. The report has found that offices are essential to creating a workplace that values community, collaboration and innovation.