When it comes to workspaces, now is the time for flexibility! This was already the trend in the past recent years, but the health crisis reinforces its imperative aspect. Companies must become more agile and take into account the employees desire for flexibility. Transformations that are obviously boosting the flexible workspace market. This is the findings of the 2020 study report and forecasts of THE INSTANT GROUP, a specialist in Flex market.
This movement is not just the result of start-ups. All businesses regardless of their size are affected. Remote work, distance management: companies must review their organization. And at the same time, rethink the ecosystem of their offices and their working methods.
The Flex market era
The flexible workspace market covers all real estate solutions that offer the possibility of reserving or renting offices, meeting rooms, coworking spaces, satellite offices, and in a flexible manner.
This alternative to traditional commercial lease model is one way to optimize costs. When you know that real estate is the second most expensive budget in a business after payroll. This is a significant part. But not only !
Shaping the workspace as close as possible to actual use, is to meet the needs of the company in terms of organization. It is also considering the well-being of employees and limiting the environmental impact.
A pioneer for more than 20 years in this Flex market, THE INSTANT GROUP supports the development of companies. By infusing flexibility in the management of their offices or real estate portfolios. The organization offers different solutions. From finding flexible office space to turnkey installation in offices in the form of a service contract.
Physically established in France since two years. The company is publishing for the first time its study report on the French Flex market 2020. And delivers its forecasts for 2021.
2020: stagnation in supply
This stagnation in supply is only cyclical. The French market has grown very rapidly over the past five years. Paris has one of the highest rates of increase in the number of business centers in the world.
But due to the health crisis, the supply of flexible workspaces increased less in 2020. We are talking about an increase of only 3%, whereas the previous year it had jumped by 16%.
More than a quarter of the growth in supply is driven by the major market operators. This is a trend that THE INSTANT GROUP is seeing in all key Flex markets.
The market shares of the large operators are increasing even if the offer is also provided by many independent operators.
“2020 has seen this progress stalling, but I have no doubts that this is a temporary hiatus. There are two reasons for this: on the one hand, flexible workspaces still only represent a very small proportion (in m²) of total office space and, as such, large French cities are lagging behind other European hubs; and on the other hand, the interest of companies in this type of space is only just beginning ” says Steven KHOURY, Executive Director, Client Solutions, EMEA @ THE INSTANT GROUP.
The new attractiveness of suburban areas
The demand for flexible spaces fell by 17% in 2020. With a major drop of 35% observed during the months of the first confinement (March and April March 2020).
The strict confinement conditions in France and in particular in Paris are one of the reasons for this. The sanitary measures have had a clear impact on the markets of city centers.
Since then, market demand has picked up, in some cases exceeding last year’s performance. Localities further away from urban centers were more attractive. But the supply of flexible spaces in these areas is still low.
The changes in the mentality of companies that have successfully experimented with remote work represent a real opportunity. And will allow the development of flexible workspaces in these areas, often closer to homes.
What trends for 2021?
Unsurprisingly, the demand for secondary and tertiary sites increased during the confinement period.
With the consequence of an awareness of owners who will increase their offer in this matter. And the implementation of new approaches by flexible space operators.
And this trend will only get stronger. It is to be expected that real estate footprint of companies will be further fragmented in various locations.
PropTech will play a key role in the development of flexible spaces. By making it easier for property managers to manage the office portfolio.
Double-digit global growth
This increase in supply in 2021 concerns flexible workspaces. They currently represent less than 1% of the total global office market.
Despite the pandemic, many markets around the world have seen increased demand for flexible workspaces. THE INSTANT GROUP expects the supply of flexible workspaces to grow by more than 21% in 2021.
It will be accompanied by a more diversified offer. And more important in regional and suburban areas (supported by greater business interest in these areas).
“Of the thirteen largest Flex markets in the world, ten have higher demand levels than before the Covid-19 crisis. In France, the level of requests in September is that observed in early 2019 before the first confinement. However, the transformation of requests into signed contracts has decreased due to the second confinement and uncertainties linked to the deployment of vaccines ”explains Steven KHOURY.
Real estate: performance vs experience
Will the real estate performance-based approach focus on personal experience? Tomorrow, corporate property managers will drive the performance of the office portfolio. By taking into account employees, processes and locations.
The search for value will be built around the “value of shared experience”. By refocusing the central “hub” office on collaboration. By promoting collaborative arrangements. And by optimizing the use of shared spaces.
As a direct consequence, the possibility of reducing the size of the real estate portfolio in some companies by up to 40%.
Towards greater variety in the offer.
Only 60% of office portfolios will be adapted to their new needs within one year. At least, this is the opinion expressed by real estate managers interviewed by THE INSTANT GROUP *.
In 2020, demand from companies in the service, consulting and technology sectors outweighed supply. This strong demand will continue in 2021.
However, the flexible workspace market must adapt its products. Especially, if it wants to attract certain expanding business sectors such as the pharmaceutical industry, life sciences and health …
* The Agile Corporate Real Estate Think Tank (ACT) was created by The Instant Group in March 2020. In the midst of the COVID-19 pandemic. It brings together more than 60 corporate real estate executives from the world’s largest companies. It aims to study and quickly anticipate changes at work.