Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
For decades, landlords treated long-term leases as gospel. Every square foot was designed to be leased, locked in, and left alone.
But today’s occupiers expect something else: agility. They want offices that flex with business.
So what if the next evolution in asset strategy isn’t radical at all — but mathematical?
A New Portfolio Logic
A balanced real-estate portfolio — roughly 90% traditional leases and 10% flexible workspace — could deliver stronger returns and greater resilience, just as a diversified investment portfolio balances stability and growth.
“The future isn’t all-flex or all-fixed,” says a recent CBRE Viewpoint. “Optionality is now part of the value story.”
Flex Doesn’t Dilute Value
The biggest misconception about flexible workspace is that it erodes building value. The data says otherwise.
CBRE’s 2024 analysis, Starting a Conversation About Flex Space, Optionality and Property Value, found that buildings with modest flexible components did not experience valuation penalties compared with peer assets.
In another CBRE study, Flexible Office Space and Asset Valuation in 2020, 71% of U.S. office transactions where less than 30% of rentable area was dedicated to flex traded within 50 basis points of peer cap rates.
Translation: Flex done thoughtfully — and kept under roughly 15–20% of a building — is valuation neutral. In some markets, it even delivers a small premium.
Why 10% Makes Strategic Sense
Ten percent isn’t arbitrary. It’s large enough to unlock optionality without compromising underwriting discipline.
For occupiers, it’s becoming the norm. By 2025, half of global companies expect at least 10% of their portfolio to include flexible workspace options, according to The Flex Insights (2024).
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Treat this as portfolio theory applied to place:
- Long-term leases = Bonds (stable income)
- Flex space = Growth equities (higher yield, higher adaptability)
- Meeting rooms & shared amenities = Alternatives (ancillary income, brand value)
For landlords, a 10% flex allocation becomes the diversification layer — absorbing volatility, expanding market reach, and modernizing the portfolio mix.
Flex Can Lift Net Operating Income
Flexible space, when operated well, can increase net operating income (NOI) in several ways:
- Premium pricing: The value-add of “flex” typically achieve higher per-square-foot rates.
- Ancillary revenue: Meeting rooms, day passes, and events drive incremental income.
- Higher utilization: Flex captures value from otherwise idle space in hybrid workplaces.
Because 90% of the asset income base remains fixed, lenders see stability — but that remaining 10% adds growth capacity and reactivation potential.
A CBRE analysis showed that even a 5–10% increase in utilization can lift NOI enough to offset higher flex operating costs — a small operational change with portfolio-scale impact.
How to Implement a Flex Allocation
1. Choose the right assets
A flex component functions as a value-add amenity in most buildings — providing overflow, swing, and disaster-recovery space alongside shared meeting rooms and collaboration zones. But flex isn’t a universal solution. Asset type, building size, upfront CapEx, and time to realize returns all matter.
Success depends on alignment — the right product in the right property for the right demand.
2. Pick the model
Options include:
- Leasing to a third-party operator
- Management or profit-share partnership
- Running your own brand in-house
Each has different capex and return profiles.
3. Set clear performance metrics
Track utilization, churn, term length, and NOI contribution — not just occupancy.
4. Communicate to capital
Frame your asset as “core leases + flex optionality” — a diversified, data-backed model. The narrative matters as much as the numbers.
A Portfolio Strategy, Not a Trend
Diversification isn’t radical; it’s smart business. Just as investors spread risk across stocks, bonds, and alternatives, companies are now doing the same with their real estate.
About 90% of space remains locked in long-term leases to provide stability, while roughly 10% flex is used to capture new demand and shifting work patterns. That 10% isn’t a gamble — it’s a growth lever.
When managed intentionally, the mix delivers resilience, agility, and stronger long-term performance.
“Think of it less as disruption, more as portfolio optimization,” notes CBRE’s 2025 Effective Spaces analysis.
The Quiet Revolution in Asset Management
The goal isn’t to flip entire buildings into coworking — it’s to right-size flexibility.
A 10% flex allocation lets landlords test, learn, and scale what works without destabilizing the asset.
As the workplace becomes a fluid network of home, hub, and third place, assets that enable choice — and quantify it — will outperform. The office regains relevance by balancing legacy office space with flex, and third place options.
Call to Action
If you’re a landlord, asset manager, or investor: Start by identifying the model that fits your business strategy. If you’re pursuing a partnership, prioritize operational expertise over brand aesthetics.
Be clear on the problem you’re solving and set time-bound, quantifiable goals to measure progress.
Then, pilot it: reposition a single floor or under-utilized space as flex, track utilization, renewals, and yield, and share results transparently. Allow for mistakes. Measure, collaborate, optimize.
Real estate doesn’t need a revolution — it needs a rebalance.
Start with 10%.
