Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
The total addressable market for legacy office space was assumed to be boundless: workers, teams, firms — all needed fixed desks and square feet. But demand has fractured across homes, third-places, and flexible work options. The result: the Total Addressable Market (TAM) for legacy, long-term leases is smaller than it once was.
Yet that doesn’t mean the opportunity is gone. Landlords who develop agile office products — ones that sync with an ever increasing agile workforce — can recapture demand by reimagining what “office” can deliver.
The Shrinking Core of Traditional Demand
We all know the stats, the U.S. office sector is stabilizing, but at a lower baseline than before. National vacancy stood at 14.2% in Q1 2025, up more than 400 basis points since 2019 (maclw.com). Class A space is tighter at 14.5% vacancy, while older Class B and C buildings report levels closer to 20% (cbre.com).
Absorption has turned positive — 5.6 million square feet in Q1 2025 and 7.3 million in Q4 2024 — but that is far below the 2010s average of 22.9 million square feet per quarter (naiop.org). The market is recovering in places, but the ceiling is lower. McKinsey projects office demand in major North American metros will remain 15–20% below pre-pandemic levels through 2030.
The Rise of “Third Places”
Not all the square footage lost from traditional leases has shifted to homes. A sizable share has migrated to “third places.” Researchers estimate that about one-third of remote work hours are now performed outside the home — in cafés, coworking spaces, and other informal hubs (arxiv.org).
In 2024, 12% of U.S. full-time employees were fully remote and 26% were hybrid, underscoring how many workers have left fixed office desks behind (techopedia.com). And the appeal of coffee shops isn’t anecdotal: a Gensler study found workers ranked coffee-shop environments above libraries, clubhouses, or conference rooms as desirable work settings (fastcompany.com).
These shifts make the point clear: demand for legacy leases hasn’t vanished, but it has been redistributed across a wider set of options.
Flexible Workspace Is Expanding
This is where flexible workspace enters. The North American flex office market is projected at $14.9 billion in 2025, with growth of 14% annually through 2030 (mordorintelligence.com). Globally, the sector is forecast to reach $60.4 billion in 2025 and $148.3 billion by 2033 (businessresearchinsights.com).
Flex space isn’t just for startups. Large companies now use it as part of portfolio strategy: regional hubs, project offices, swing space. Smaller firms use it to avoid long leases. The story isn’t substitution, but capture — flex draws in demand that would otherwise stay outside the market.
A Narrative Decades in the Making
This discussion isn’t new. More than 20 years ago, MIT and Gartner’s Agile Workplace study described the office not as static real estate but as “a bundle of connectivity, occupancy and management services … enabling work, whenever and wherever it needs doing, face-to-face or in virtual space” (MIT News).
The researchers argued that “agility … is now a high priority for enterprises” and that the workplace must be “an integral part of work itself — enabling work, shaping it, and being shaped by it” (ResearchGate PDF).
The fact that these ideas surfaced in 2002 underscores that today’s TAM shifts are not sudden disruptions, but the acceleration of long-standing trends.
Where Total Addressable Markets Overlap
Consider a Fortune 500 company that rightsizes its HQ from 200,000 square feet to 120,000. At the same time, it adds 30,000 square feet of flex space across regional hubs. The legacy TAM shrinks, but the flex TAM expands. The combined footprint remains substantial.
This overlap is where the real opportunity lies. Flex converts latent demand into active demand. It brings back users who wouldn’t commit to a long lease but will commit to flexible terms.
The overlap isn’t risk-free. Mid-size firms may toggle between flex and traditional leases depending on price and terms. Over-allocation to flex could weaken long-term building stability. Infrastructure must be built for shared use. Landlords who misjudge the balance risk cannibalization.
The New Total Addressable Market Equation
Legacy office TAM is smaller than it used to be. Flex TAM is increasing. Together, they form a recombined market that requires new strategies. Landlords who insist on treating flex as “nice to have” or a nuisance, will miss the opportunity.
Flex isn’t taking share — it’s expanding the effective TAM by pulling work that migrated to homes, cafés, and third places back into the office ecosystem.
The lesson is simple: product–market fit in commercial real estate can’t be based on the past. The opportunity is not in defending the old pie, but in baking a new one that matches how people actually work.
The workplace pie is the same size — but the legacy office slice is smaller. Flex may be the way to taste growth again.
