Landlords are turning to flexible workspace firms to fill in vacant office space and rebound from the losses caused by the pandemic.
A report by JLL has shown that, while landlords are seeking more office space, operators are not eager to sign new leases as they have also faced their own struggles over the past year or so. However, some experts believe a pivot to management agreements could be the solution needed.
“The shift to management agreements means the sector can grow quickly with the capital requirements spread across a greater set of partners,” said Ben Munn, managing director of flex space at JLL. “Management agreements can also align landlords and operator incentives, creating a mutually beneficial partnership for all parties.”
This business model is similar to those seen in the hospitality industry, in which operators handle daily managerial duties and landlords cover the expenses to outfit the space, while also receiving a larger portion of revenue. Even more, building owners are able to alleviate the risk associated with leasing to a single tenant.
Additionally, some landlords may choose to operate their own flex space brand instead of partnering with operators. Others may purchase stakes in coworking firms or acquire smaller competitors altogether.