Over the last decade we have witnessed a flexible office revolution that has accelerated a maturity in the sector, driven by an increase and variety in operators, as well as the diversity and quality of space available.

Flexible offices have also established a central part in occupiers’ real estate strategies in addition to playing a pivotal role for those landlords seeking to create spaces that meet the end user's demand.

However, in March last year, the flexible sector found itself at the apex of those parts of the market most severely impacted by the Covid-19 pandemic. Over the last 10 months, we have seen it enter survival mode which, while challenging, has also allowed operators to reflect on their business models and adapt areas that needed addressing.

This preservation mode has given the sector a good shake and, while it has resulted in some casualties at either a building level or, in some cases, an entire operator, it has also highlighted that the flexible office market is far more robust than people have given it credit for.

As a result of providers taking stock, we now have a leaner looking sector that is ready to capitalise on what is expected to be a substantial amount of pent-up demand in the second half of 2021.

There’s no question that the depth of the flexible office market has evolved over recent years, yet there remains a distinct knowledge gap for landlords when it comes to flexible space, particularly around management agreements or actually creating space themselves. We have seen a number of landlords successfully enter the sector and expect this to continue at pace, however, for some there is still a lack of awareness regarding the existing products that they are competing with.

The flexible office sector has built a foundation on offering first class hospitality, a sales platform and expert teams and amenities that go further than simply providing flexible terms and fitted space. Brand, economies of scale and the sales platform are all vital elements that shouldn’t be underestimated. For landlords the key question is how do they best deliver space that adds value?

This expansion of different services and providers has inevitably added a layer of intricacy to the flexible office sector and it’s therefore no surprise that the advice required by landlords, providers, occupiers and investors has also had to adapt.

At Savills, we felt it important to make clear that our services in relation to flex are not limited to just brokerage or supply. Establishing Savills Flex, a key sector group that brings together our service specialists that operate in the flexible office market, was a natural response for us to provide augmented and cohesive advice to clients.

Looking ahead, flexible office space is certainly not going anywhere and could even double in size over the next five years in the UK. For the market to progress, increasing transparency on operator and building performance will be key. Investors and banks are now beginning to get their heads around the product, but the lack of investment deals and evidence means many questions remain over the valuation.

The number of transactions we see taking place that involve flex space on a management agreement will undoubtedly be important to driving the market forward and providing some context.

Further information

Contact Cal Lee or Charlie Wardroper

Contact Savills Flexible Workspace