Share
Here's how enterprise companies are using flex space to diversify their real estate portfolios and accommodate new styles of work.
Once considered the domain of startups and freelancers, flex space is increasingly becoming a strategic investment for enterprise and Fortune 500 companies.
Attracted in part by the flexible lease terms, companies are turning to flex space to diversify their real estate portfolios, accommodate new styles of work and, in some cases, expand their geographic footprint.
The ongoing uncertainties surrounding COVID-19 have fueled this demand in some expected ways — and some unexpected ways, too.
Below, we’ll walk through three ways enterprise companies are investing in flex space.
This guide includes:
- How enterprise companies are using flex space to combat headcount uncertainty
- Why some enterprise companies want flex space in the same building as their traditional offices
- How enterprise companies are using flex space to adopt remote-first policies
Using flex space to combat headcount uncertainty
Here’s a basic truism in business: It’s really hard to predict the future — especially when it comes to forecasting your employee headcount.
In 2019, 30% of large corporations in forecast increased headcounts for 2020 and planned accordingly for it.
In light of COVID-19, these forecasts now seem quaint. But they highlight the fact that most high-growth companies build projections and forecasts that extend 6-12 months out.
[For a deep dive on all things flex, check out our complete guide to flexible workspaces.]
“Even before COVID-19, we saw larger enterprise companies dealing with uncertainty about their headcount needs,” says Andrew Kupiec, the CEO of Hana. “As the name suggests, flexible workspace solutions offer these occupiers a great degree of flexibility to accommodate their immediate needs — and the flexibility to accommodate their future needs, too.”
Flex space is particularly attractive for some enterprise occupiers who lack visibility into whether they will grow or contract within the next 2-5 years. Traditional office space leases feature fixed space amounts with a 7-15-year commitment, which makes forecasting present and future space needs critically important.
“The beauty of flex space solutions is how they’re tied to the line of sight you have and not any longer,” says Kupiec. “If your business needs change and you find yourself in need of more space or less space, you have the flexibility to meet those needs accordingly.”
In Practice
An enterprise occupier wants to sign a new real estate lease but lacks visibility into long-term headcount growth and contraction cycles.
Instead of signing a traditional lease with fixed space amounts for a 7-15-year lease, it turns to flex space to accommodate its current space needs for a 2-5-year period — and have the flexibility to grow or downsize its real estate footprint, as needed.
Co-locating traditional office space and flex space in a single building
If flex space affords enterprise companies flexibility in their real estate planning, it can also offer an attractive complement to their traditional office spaces — sometimes in the same building.
“We’re seeing Fortune 500 companies say we want to sign a traditional lease in a particular building, but we want a flex space offering in that same building to accommodate future growth and current workspace needs,” says Lisa Cations, the Head of Enterprise Solutions in EMEA for Hana.
This co-location model where a company complements its traditional workspaces with a flex space offering is becoming more attractive in light of COVID-19, which has led companies to adopt expansive remote-work policies.
It has also forced companies to consider how these new remote-work policies will impact future workspace occupancy rates — and how that will, in turn, impact how much office space they need.
“Some companies are now saying, ‘We’re interested in signing a traditional lease but only for enough space to accommodate 60% of our workforce,’” says Cations. “These companies are turning to flex space to have spillover space for their entire workforce.”
But it’s not just about downsizing. COVID-19 has pushed many organizations to re-envision how they’re using office space. Some companies are actively considering securing more office space to reduce density. Others are looking into creating spaces that can better support collaborative work, which employees say is the number one motivator for going back to the office.
“In the past, occupiers have had to lease enough space for peak occupancy and whatever headcount growth they anticipated in the 5-10-year plans,” says Cations.
She continues: “Now, occupiers are contending with the potential for reduced occupancy rates after COVID-19 and a demand for more collaborative spaces from employees. In both instances, enterprise companies are looking to flex space for support.”
In Practice
A Fortune 500 company wants a long-term foothold in a given market with a traditional office lease but plans only to take enough space to accommodate its average daily occupancy rates. On days when it reaches peak occupancy or has teams who need dedicated collaborative space not provided in the traditional office, it turns to a flex space offering within the same building.
This enables the company to reduce its traditional office space needs by up to 15% without giving up the ability to accommodate its entire workforce on peak occupancy days. It also offers the occupier the flexibility to grow its real estate footprint as needed by taking additional dedicated space with the flex space provider.
Using flex space to adopt a remote-first model
COVID-19 has overturned basic assumptions among enterprise companies around how much office space they need to support their workforce — especially as people work in the office with less regularity due to new remote-work policies.
But some companies are moving in an even more progressive direction. Rather than offer employees the ability to work remotely during and after COVID-19, they’re adopting remote-first workplace policies for entire teams or their entire workforce.
“Companies that are considering adopting a remote-first model are grappling with the fact that a full-time remote workforce isn’t tenable for all employees,” says Georgia Collins, the Executive Vice President of Client Solutions at Hana. “The basic issue is at some point, every company needs dedicated space for employees to meet in and work from – and having those in-person moments is undeniably critical for company culture.”
Flex space is filling that need, offering companies a simple way to give their employees a place to meet — and a workplace, when they want it.
“People will go back to the office,” says Collins. “But the way they’ll use the office will change. Flex space offers enterprise companies an incubator to test some of these new ways of work at the office and offer their teams a place to convene when they need to.”
[Learn about why distributed teams are here to stay due to COVID-19.]
But flex spaces go a step further in helping organizations adopt remote-first policies and undergo business transformations. At their best, they offer a network of workspaces inside and outside urban centers for employees to use.
“With the right flex space partner, enterprise companies can offer their employees the pretty unique option of choosing the workspace location that works best for them,” says Collins.
In Practice
A global company wants to adopt a remote-first workplace policy — but it still needs workspaces for its employees to meet in and work from, at least some of the time.
The company is able to leverage flex space to fill those workspace needs while saving on the cost of a traditional office space lease. This includes adopting a pay-as-you-go model where the company only pays for the workspaces and meeting space that employees use, when they use it.
The company can also purchase standalone private offices from flex space providers to offer specific teams satellite offices.
Take this with you
Over the past several years, flex space has evolved from the domain of startups and entrepreneurs to a key strategic investment among enterprise and Fortune 500 companies.
COVID-19 has accelerated this trend. Many large and global organizations are now turning to flex space to help diversify their real estate portfolios and accommodate a new push towards remote-work policies and reduced office occupancy.
This has profound implications for the future of flex space. Providers had already been moving away from a coworking-first model and exploring more diverse workplace offerings such as private office suites. For some, these offerings include bespoke enterprise layouts designed to meet an occupier’s workplace requirements.
As the demand amongst enterprise companies grows, expect this move to continue — and to see new flexible workspace solutions that can better meet the needs of larger organizations.
Learn more about the importance people place on meaningful connection at the office in our latest report, COVID-19 is accelerating the demand for flexibility and meaningful connection.
