February 14, 2020

Flexible Workspaces Supporting Flexible Work

There is little doubt that the age of the flexible workforce has arrived in full force. According to a survey by FlexJobs, flexible work schedules are a top priority for workers on the hunt for new jobs – equal to if not more important than salary.

While employers were initially slow to support the reality of flexible workforce needs, they now know it is an important reality. In fact, progressive organizations tout flexible work as a differentiator for hiring and retaining top talent.

Consider the following trends that are making it easier for employers to support and enhance workforce flexibility:

1) Businesses are embracing agile processes and team alignment to adapt quickly to changes in their competitive landscape as well as the overall economy.

2) Digital productivity applications are helping teams better organize schedules, coordinate remote collaboration, and measure and highlight productivity gains.

3) Modern workspaces no longer require hundreds of thousands of dollars or months and months up front for furniture, architecture, build-out, cabling, proprietary networks and phone systems, etc. Contracting for leased space for 10 years rarely makes sense anymore, other than for a company’s large-scale headquarters or campus location.

Let’s look at  the impact of these trends on the role and management of today’s physical workplaces:

Office spaces now function more as hubs and less as destinations.

In the past, physical offices were the literal manifestation of the businesses and their cultures. In the digital age, however, the identity of a company resides more in the virtual world of its online brand reputation than in the bricks of its physical offices.

Now, offices function more as home bases or ‘touchdown spaces’ for workers that are on the go, working remotely some or all of the time. The control over how to use the workspace and when to work remotely has shifted from management to employees, which in turn means the spaces have to be more flexible and less defined than in the past.

Design and layout emphasize utility and mental and spiritual health, over organization structure and power.

Closed-walled office mazes and cubicles are being torn down in favor of more open plans where the space is available for everyone to use and based on the type of work they happen to be engaged in. Private offices and even open desks are more commonly reserved for days or even hours and less often a perk for seniority.

The best spaces are zoned with neighborhoods for focused work, frequent phone calls, and areas with room for more ambient chatter and unstructured collaboration.

And the best workspaces are much healthier for actual human beings from the walkability in the neighborhoods to the natural light and biophilic design, and even the ergonomic function of the furniture.

Companies lease less space, for shorter periods of time, and move more often.

Companies are seeing the futility of leasing and building out spaces for 10 years at a time, just to see them turn into expensive white elephants ill-suited to their changing circumstances in a few short years. Employees just don’t value these things like they used to.

Even the biggest companies ask their tenant brokers to find them options they can lease for just a few years on terms that allow them to switch locations without extreme penalties. Some companies are even opting for multiple, smaller spaces spread across an urban area to reduce commute pressure and increase their ability to recruit from all parts of a city.  

These rapid changes in how companies lease, outfit, and use spaces makes way for a new paradigm for workspaces: one focused less on individual leases as individual transactions and more towards a workspace-as-a-service paradigm.

The emergence of workspace networks

Flexible workspaces are predicted to grow from 2-3% of all commercial office space today to as much as 25% in five years. And to fulfill the demand for workspace flexibility, several workspace networks have emerged to deliver on this workspace-as-a-service paradigm.

There are three different types of leasing networks emerging:

Coworking operator network - The first type of network is the flexible workspace operator network and examples include WeWork and Industrious.

Branded Landlord network - The second type of network is offered by very large asset owners or managers and examples include Flex by BXP (Boston Properties Group). In this case the landlord owner is operating spaces and taking the risk associated with flexible leasing. This approach is challenging for most landlords, however, since all but the largest lack the operational expertise and focus to operate and lease space this way. What’s more these networks are closed and limited to only one owner’s properties so they don’t offer much choice to tenants.

Open leasing network - A third approach to flexible workspace supplies a leasing platform that connects members directly to many different landlord partners and their diverse set of spaces with pre-negotiated, flexible leasing terms. In this example, members pay a subscription fee in order to avoid costly security deposits or lease termination fees so that they can lease as much space as they need and can move as their needs change.

As the demands of the flexible workforce create pressure in the market, property owners must meet it with non-traditional approaches to create supply. Ground-breaking approaches like designating 20% of their buildings pre-negotiated, flexible leasing terms.

The commercial real estate industry is in need of a jump-start into the modern era of leasing. Agile leasing might just be the jolt it needs.

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