Flex space UK Research | 20
Preparing for a flexible tomorrow
While the sector has seen significant growth in recent years, it remains in its infancy, especially in the regions and a sense of perspective must be applied. Flex has not yet truly disrupted the office market but is a response to the consumerisation in the workplace.
One operator summed this up neatly,
“In any other sector, a new offering would not have generated such waves but, because the property sector is slow moving and hasn’t changed, it’s a talking point.”
1. What does it mean for operators?
Regional cities now offer the greatest prospects for expansion, and some operators will develop new products and set new value benchmarks in these cities. Operators will not target every city, and secondary cities are less likely to see the widespread adoption of flex. New markets will be chosen carefully, but growth is more likely to be demand led. Understanding the subtle nuances of the local customer base and the local geography/dynamics will be the key to success and hence profitability.
“Like any industry, especially during a period of accelerated growth, some players will consolidate, some may go out of business, but the industry will remain – driven by the underlying
fundamentals of the market.” National flex operator
The focus on space as a service will persist and over time operators will need to differentiate themselves more clearly. The sector will continue to lead the real estate industry in terms of consumerisation of office space. Amenity and service levels will continue to evolve and those that remain at the forefront will be most successful.
Co-working and collaboration space will increasingly be ancillary and will be used to animate space, particularly on the lower floors of buildings to provide a sense of community rather than a revenue generating product.
Expansion of flex space will see a blurring in the lines between landlord and operator offer, with both sides adapting to occupier demands. Operators’ business models will evolve to encompass more bespoke management offerings. Longer lease terms will be evident in the flex sector, which will converge with shorter lease terms being offered by landlords.
There will be some real opportunities for consolidation within the industry. The rapid growth in the number of operators, combined with the low barriers to entry will place some under pressure. This is likely to result in a further polarisation of the sector, with the bigger operators cementing their position and niche operators holding their own.
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