Need short-term office space? Better call a JLL “Flexpert”
JLL's new flexible space expert Marie Phillips consults clients who need flexible space options for their overall real estate strategy.
Flexible space – any type of space that can be used flexibly, such as short-term office space, space leased on flexible terms or coworking memberships - represents the evolution of commercial real estate.
Flexible space is changing the way organizations across all industries approach their real estate footprint. As an example, biotech firms and lab users plan their real estate strategy around flexibility, all the way down to the way they operate commercial kitchens. In the Retail and Banking sectors, “pop-up” stores and branches use flexible space to engage new types of customers.
But it is in the commercial office market where flexible space growth has been the most dramatic. This segment of the market has seen 22 percent growth since 2010. And that growth is projected to continue, with JLL predicting as much as 30% of all office space will be consumed flexibly by 2030.
JLL’s own research identifies nearly 1,000 operators of flex space across the U.S. – and that number continues to grow. While some of these operators are global brands, like WeWork and IWG/Regus, about 75 percent of the market is held by smaller, regional players. There are more than 40 operators, with over 200 different flexible space locations, in the Bay Area alone.
The reason for this growth is, simply put: demand. Flex office space appeals to a wide variety of users for a wide variety of reasons. Here are some:
Start-ups: Start-ups can’t tie up capital in expensive, long-term office leases, improvements or equipment until they’ve proved the business model. Coworking spaces provide office space and amenities such as conference facilities on an as-needed basis. Memberships can be expensive but can be cancelled easily. For later-stage firms, shorter-term leases can tide them over until they need to scale and take on longer-term space commitments.
Mid-tier: Companies within a year of locking down long-term space or those that may have signed a lease and are waiting for completion of tenant improvements can utilize short-term flexible space, which is often available on a month-to-month basis.
Enterprises: Large, established businesses can use flexible space as part of their real estate strategy, especially as they embrace a more distributed model to compete the war for talent. Securing flexible space in a new market, for example, is a great way to test the market without committing to a long-term, physical presence. Many coworking operators also provide some level of branding for large employers, which can be used as interim space prior to moving into a new headquarters or long-term office location. On the other hand, enterprises are modifying their workplace programs to be more flexible/agile and accommodate operational changes in the business.
Despite this broad demand and the rapid growth of flexible space, “flexperts” remain few and far between. JLL believes there are very few true specialists in the U.S., armed with flexible space market data, relationships with flexible space operators and best practices on applying flexible space to a corporate real estate strategy. That’s changing, however, with a new breed of flexible space specialists working seamlessly with traditional brokerage teams to provide flexible space insights that support broader real estate strategies.
JLL’s newest Flexpert is Marie Phillips, a seasoned expert with 15+ years of experience in the flexible space sector. JLL’s Global Flex team is putting JLL’s leading flex intelligence and data to work to benchmark the market and negotiate spaces for a wide range of clients who need a flexible space component to their overall real estate strategy. Learn more about Marie here.