Building flexibility within an intrinsically inflexible asset has been an issue overlooked by many corporations. However, as the world approaches a post-pandemic era and hybrid working becomes mainstream, companies from different sectors are reassessing their workplace strategy and reviewing their real estate footprint. Corporations embrace flexible workspaces for several reasons and in different ways. For those seeking cost reduction and financial flexibility, remote work could equate significant cost savings by leasing less space than they would with a traditional lease. On the other hand, for those looking to promote marketing or enhance organizational branding, this could mean building their own flexible workspace within their portfolio.
COVID-19 has brought a new level of uncertainty to corporations and has made them rethink the amount of real estate they occupy. According to CBRE research, occupiers around the globe are anticipating more use of flexible workspaces as a way to meet new demands. While in June 2020, 23 percent of occupiers believed flexible workspaces would play a significant role in their long-term real estate strategy, in September 2020 that number grew to 36 percent. While there are many possibilities to adopt flex, let’s break down six ways corporations take to adhere to flexible workspaces.
In-house flexible space for employees
For companies looking for talent attraction and retention, increasing employee innovation, well-being, and productivity while also inspiring company culture, creating an in-house flexible workspace for their staff is an interesting proposition. This is the case for NatWest in 250 Bishopsgate in London, who developed a flexible workspace with LOM Architects on the third floor of the building. From outdated meeting rooms, the renovated flex space now offers a variety of work settings, which includes individual work positions, collaboration areas, meeting spaces, and quiet zones. This approach is common in advanced technology firms and perhaps Googleplex in Mountain View, California, is the classic example. The 13 different zones Clive Wilkinson Architects created mimics a university campus and offers functional flexibility for the worker, who can choose its preferable place to work and interact.
As an aftermath of the forced experiment of working from home during the pandemic, companies are looking into ways to accommodate hybrid working within their real estate portfolio. For instance, in June 2020 Quora decided to adopt remote work as their primary orientation and convert their open office in Mountain View into a coworking space for employees who want to work there. In the UK, Aviva is also taking a similar move. The insurance company is closing three offices, reducing the size of others, and investing to provide a more vibrant and inspiring in-house flexible workspace for their employees.
In-house flexible space open for public
In this approach, corporations set up and operate a flexible workspace open for the public within their real estate portfolio. This debut into the flex market is tangential to corporations’ core business and can be a risky move. However, the underlying goal is to build their brands, identify potential new customers, attract talents, or learn from them. In Oklahoma, for example, Citizens in Edmond bank turned a vacant office into a flexible workspace, called Vault405. Other than turning a liability into a potential income-generating asset, the initiative also allows the bank to increase its organizational branding and establish a relationship with potential clients. Similarly, in 2015 Barclays started repurposing under-used space and created Eagle Labs, a co-working and incubator for startups that is now present in 20 locations around the UK.
In-house alliance with an operator
Companies can also partner up with an operator to create and manage a flexible workspace within their underutilized corporate real estate. For corporations, the main rationale behind this alliance is to have access to the operator’s expertise and connections and thus reduce risks linked to flying solo within the realms of flex. Verizon seems to be a big fan of the model. The company has partnerships with co-working provider Alley in New York, Work.Life in London, and JusCo in Singapore, to name a few. Tryg, a Scandinavian insurance company, has also embarked into the model and has joined forces with operator Talent Garden Rainmaking, to create The Camp, a custom co-working space for entrepreneurs located in the middle of Tryg’s headquarters in Ballerup, Denmark.
The freedom to work without physical constraints is also a driver pushing companies to offer memberships to their employees as an aftermath of the COVID-19 pandemic. Spotify introduced in February 2021 the work from anywhere program for all employees, which includes, flexibility in terms of location and, according to the announcement on the company’s blog “if someone chooses a location that is not near a Spotify office, we will support them with a co-working space membership if they want to work from an office.”
Other than individual memberships in hot or dedicated desks, companies also take private offices in flexible workspaces, which allows them to quickly expand or contract their operations. Motives behind this move include testing new markets, establishing a swing space, and setting up satellite offices, or spokes, for a more distributed workforce. As an example, Chinese e-commerce giant Alibaba has 30 memberships, which include both dedicated desks and private offices, in CoWrks, a flexible workspace in Bengaluru to set up a presence in the Indian start-up capital. Also aiming to test a location, US bank Goldman Sachs recently signed a membership agreement for one floor at WeWork 55 Colmore Row in Birmingham, which represents the first regional office of the company in the UK, with potential for expansion over the coming years.
Other than the ease of expansion, this model also allows contraction when necessary. For instance, in 2017, while searching for a 350,000 square feet office in New York, IBM signed a membership deal for all desks of WeWork’s 88 University Place to accommodate 600 employees, which equates to 70,000 square feet. In 2020, however, as the pandemic hit, IBM decided to vacate the premises, a move facilitated by the short-term memberships provided by the flex operator.
In this approach, corporations act as a sponsor/member of a flexible workspace and get to showcase their products or services in the environment. For instance, AT&T has established an ‘AT&T Engagement Center’ within Launch Fishers in Indiana, a co-working space that mostly targets startups and entrepreneurs. With the engagement center, Launch Fishers benefits from having the telecommunications giant as a member and from the financial contributions AT&T made to the venue. In return, AT&T benefits from being the fiber provider for the co-working space and from the exposure to tech-savvy people starting innovative businesses without the mall atmosphere. In a similar move, Samsung has initiated an experiment with WeWork and now offers a care center in three locations in the U.S, open to WeWork members and Samsung customers. The initiative resembles Apple’s Genius Bar, but at a fraction of investment in bricks and mortar, with the advantage that while people wait for support, they can get some work done, aside from the fruit-infused water.
I have come across these different ways that companies are creating flexibility from an inherently inflexible asset while researching flexible workspaces for my Ph.D. This growing property type is increasingly of interest to the academic world since there is little to no research around what it means for our companies, our buildings, and our cities. Please take a moment to fill out this survey for my research that analyzes the experience of corporate real estate managers, human resources managers, and employees using flexible workspaces.