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New Report Shines Light on Where Flex Office Providers See Growth

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Back in the 1960s, when computing was young, a company out of Massachusetts created what was called a “time share” for the financial industry. This wasn’t a place for execs to spend a few predetermined weekends at an international resort, it was a way for companies to buy off-site computing power without having to own what were then big, expensive and temperamental machines. The financial data that they collected ultimately spawned the long-standing research organization Interactive Data Corporation. IDC has created market research for a number of industries, including financial and IT, for decades. Over the years they have expanded the number of the technology markets that they report on and now they have focused their attention on flexible office space. 

A new IDC brief surveyed and interviewed flexible operators and commercial real estate managers around the world to try to understand what the future of the flexible workplace industry will look like and how technology will play a role. I talked to one of the authors of the report Mick Heys, Vice President of Future of Workspace & Imaging at IDC, about what he learned researching the burgeoning industry. “I think the most surprising thing is that everybody has a different approach. No one is offering everything to anybody,” he said. We have certainly seen this with the proliferation of niche co-working offerings, for certain industries like biotech or cannabis, or for certain users like women or minorities.

He also noticed something that is happening in the larger office industry as well. Space operators are having to offer much more than just space, including things like hospitality coordinators and an IT team. We have seen the role of office manager expand, and it has left landlords in two camps, those that want to adapt their companies to the growing needs of their clients and those that would rather outsource this activity and focus more on the asset management role. “It seems to be that the more established companies are okay to let someone else do the hospitality. Newer companies are more willing to take it on,” Heys said. He also noticed that flex spaces in “happening city centers” were more likely to incorporate the high touch hospitality that modern office renters want.

It seems to be that the more established companies are okay to let someone else do the hospitality. Newer companies are more willing to take it on.

Mick Heys, Vice President of Future of Workspace & Imaging at IDC

Flex space itself is also becoming a part of the expanded office amenity mix. Heys sees flexible office space becoming a bigger part of the overall office leasing environment, with most large office buildings having at least some space dedicated to it. “The general sentiment was that co-working was not where the growth is,” he said. “Now, most see much more potential serving small and medium enterprises. They are a bit more volatile, they grow and contract more.” He also noted that this was determined a bit by geography as places like Europe are largely comprised of these organizations that they like to call SMEs (small and medium-sized enterprises). The report also found that as clients for flexible office space grow, so too do their IT needs. While co-workers often only need the ability to login to a secure wifi network, businesses often need their workplaces to fit into their existing cyber-security schema, creating a challenge and an opportunity for all workplace operators.

The research was conducted before the COVID-19 pandemic. I asked Heys what he thinks would change if he conducted this same survey today. “This will likely increase the demand for flexibility, especially lease terms,” he said. “Companies will not want to commit money to a long term lease, they might not even have it to commit after this downturn. They will instead want a flexible arrangement which should drive growth in flex space.” He also thinks that workspaces are going to have to be much smarter if they want to instill the confidence needed to get many back into the office. Things like social distancing monitors and advanced sanitation techniques will be the difference between assuring companies and employees that it will be safe to be in confined, shared spaces until a vaccine is developed. 

Overall, the needs of flexible space are mirroring that of many organizations. They are interested in being resilient in case of another unexpected downturn, finding space that meets their IT needs and improving employee productivity and wellness. All of these will factor into how the flexible workspace industry grows and will be determining factors on what shape it takes once we all finally get to return to our offices.

To read the full report on how tech enables flexibility, click here.

Propmodo is a global multimedia effort to explore how emerging technologies affect our built environment.

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