How Flexible is The Future of Work? 25%, 50% or 100%?

• U.K. landlords estimate that more than half of office space will be flexible by 2030, significantly higher than traditional expert projections of around 20-30%.
• Factors such as the broad definition of flexible space, post-Covid work trends, and advances in AI might drive higher adoption rates than previously thought.
• Despite current penetration rates being low, especially in dense coworking markets like central London and Manhattan, there is substantial room for growth in the flexible space sector.

infinitSpace, a flexible space white-label firm based in the U.K., recently commissioned a research report on the views of 250 U.K. landlord companies. According to reports, and somewhat to my surprise, these landlords reported that by 2030, they estimate that on average 54% of their space would be flexible. 

Even allowing for a skewed sample of landlords, that presented a really interesting view of the future of work, which led me to wonder for the first time in a while about the outer limits of flex space. 

On September 1, 2024, I will have been in this industry for 25 years, and in the early years I used to think about the potential size of this industry a lot. 

In those days, it was still necessary to explain to people I met for the first time, what serviced offices or business centers were, usually by referring to Regus (the best known brand in the industry), otherwise they would not have a clue what I was talking about. 

More recently I have been focussed less on the possible maximum size of flexible space and more on the year-on-year growth of the sector and the financial aspects of that growth. You could say that I had thus lost sight of the big question. 

How big can the flexible workspace industry get?

Whenever I was asked my views on how big the industry could get, I would say that the long-term structural share of flexible space would be around 25% of total office space. I came to that view partly instinctively and partly as a result of some research done on the future of work by the Fraunhofer Institute in Germany about 20 years ago. 

Conferring recently with another long-time expert in the sector, I found that his view had always been that the long-term share would be 20%, so almost the same as mine. 

Were we both wrong, should we have been aiming higher, nearer to 54%? 

Part of the explanation of such a high estimate may come from the definition of flexible space being used. How flexible does it have to be and how many services do you require to be offered alongside the space, if any, in order to count as flexspace? 

If you take a wide definition of flexible space, why stop at 54%, why not say 80% or even 100%? Would any company wish to tie itself into a long contract for space if it didn’t have to? Perhaps all space will be flexible in the future? 

In its research, the Fraunhofer Institute had distinguished between two types of demand for space and had concluded that around 80% of the space occupied by a major corporation would be “core” and not subject to rapid change, whereas 20% would be changeable, devoted to project work and similar shorter-term requirements. 

As a consequence, it would make sense to take a longer lease of the core space and to have the remainder on flexible contracts. However, their researchers were writing many years before Covid and AI arrived on the scene, and these two factors may possibly have changed the equation in favor of more flexible space. 

It is worth pointing out when thinking of a possible maximum percentage, that the current level of market penetration is still nowhere near the levels we have mentioned, even in central London or in Manhattan, the densest concentrations of coworking space in the world. So the long-term structural growth of the sector has some time left to run, whichever way you look at it. 

So, having turned my thoughts to this question again after a long break, have I changed my mind, or do I still think the long-term penetration will be 25%? The answer will certainly vary from location to location, but on average I am going to raise my projection by 5 percentage points to 30%. 

My rationale for this is the increase of working from home post Covid. I think that a desire for a better work/life balance has changed the future of work, though perhaps not by as much as others have speculated. 

In my view 54% is unlikely as an average of all office space, though it could be right if applied to a more narrowly defined subset of office space. Whichever it is, it is clear that it would be a mistake to underestimate the extent of flexible space that will be required.