Flex sector will change the office market?

Changing occupiers’ demands on how office space is best used will continue to heighten the flex sector’s appeal to landlords. According to Savills’ latest research on the European market, flex office is expected to account for 20% of office stock in the longer term.

Flex offices with a profit

Although the conventional office market shows recovery, its 43% (Savills, June) occupancy is still significantly down on the circa 70% levels prior to the pandemic. The tendency gave the opportunity for flex operators who could charge higher prices for private office desks, which has led 82% of European flex operators to report an operating profit. 

20% in 10 years

According to the latest Flexmark report, flex contract occupancy rates are back to pre-pandemic levels of over 80% in private offices and over 65% for shared space. Savills and the flex office specialist Workthere.pl anticipate that flex office stock in Europe will reach circa 20% of total office stock across the continent over the next 10 years.

After all, in a record-low unemployment market, businesses must ensure that their real estate appeals in order to attract and retain staff. Employers are searching for the optimum balance in their work-from-home (WFH) policies with most employees seeking flexibility in terms of WFH and office days. 

Amsterdam, Paris and Lisbon are the most active

According to the Savills report, European flex office demand reached 193,000 sqm during H1 2022, in line with the levels recorded for the full year 2020 and 2021. Flex office demand accounted for 5% of overall take-up across European cities during H1 2022, up from 3% during the pandemic, and remains on a gradual recovery to the 8-9% observed before the pandemic 

Amsterdam, Paris CBD and Lisbon have been the most active flex markets over the last 18 months. Although the major German cities have generally seen lower levels of flex office demand in recent years, this is partly due to a more traditional working culture with a higher proportion of private offices in conventional space. 

Many relocating to Poland 

The Russia/Ukraine conflict continues to increase business uncertainty across CEE, with many companies relocating to Poland and seeking office space on more flexible terms. Modern coworking space in Poland, despite its numerous operators, is mainly concentrated around a few major providers and the five largest operators account for 44% of the total space offered. 

Mike Barnes, Associate Director, Savills European Research told Property Forum: “Looking forward, if employer hiring sentiment weakens, and unemployment rates begin to rise, this may reduce the total quantum of office space required. However, economic uncertainty will help fuel demand for more flexible lease terms, and the shift to enhanced amenities and a widening range of working forms will support further demand for flex space. Coupled with the rising cost and timescale of fitting-out premises, we anticipate that flex office take-up will account for 5% of European office take-up in 2023, 6% in 2024 and will account for 20% of office stock in the longer term.”


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