Flexible workspace — also referred to as coworking — is firmly established as an alternative to longer-term office leasing. This approach can accommodate a wider range of users than the traditional linear sequence of lease, build, furnish and manage, performed by the occupier’s organization. The use of the bundled approach offered by flexible workspace suppliers is growing at a frenetic pace. In our January 2019 U.S. Flexible Workspace Outlook Report, we noted that the flexible space inventory across the 19 markets we surveyed increased by almost 50% in the 18-month period ending in Q2 2018 to a total of 27.2 million square feet.

Aggressive expansion and increasing competition are driving continued evolution in the flexible workspace sector. Operators and landlords are striving to distinguish their offerings as occupier demands evolve and they become more familiar with the benefits. The conventional office supply process serviced by traditional real estate services companies is contending with threats and opportunities, such as changes to lease accountancy, increasingly mobile working, and the desire for rapid responses to quickly changing business requirements. These pressures are encouraging the development of alternative leasing models that blend flexible and traditional spaces in innovative ways.

But there is not a one-size-fits-all flexible workplace model that works for every organization. In this article, we detail the many forms — both experience models and financial models — that flexible workspace providers are developing to fit the highly variable space types and activities occupiers require to enable their business objectives. We also present a matrix that quickly shows occupiers the different options available in the current marketplace depending on the scale and type of operating environment they require.

Different Customer Types Require Different Product Types

From single person entrepreneurs to large scale enterprises, potential users of flexible workspace run the gamut of entities and individuals looking to leverage the product type. There are a wide variety of different customers for the vast selection of different forms the product takes. For sake of ease, here are the basic buckets of user types:

Different Experience Models Support Different Business Objectives

Experience models, which range from providing traditional shared coworking desks and private offices to servicing high-end event venues where every need is catered to, are offered by a plethora of a service providers. Differentiation in product type, atmosphere and fit-out, operational support and the geography served are what distinguish the various offerings apart. Shown below, these spaces range on a privacy continuum from shared/unassigned/bookable space to dedicated/assigned space, the usage of which is largely dictated by scale of the operation.

Many Different Reasons to Use the Product

We’ve covered the reasons for using this product type before — but briefly, below is a description of the different reasons:

Plotting Different Customer Types Versus Different Experience Models

Different customer types, different experience models and different rationales for using the product type all play a role in designating what space gets taken, where it gets taken and what financial model is deployed in order to pay for it.

The matrix below describes the different models and presents a way to think about how to put together a deal with the various service providers to meet the business’ needs.

As we discuss the matrix, there are two important concepts to keep in mind: the continuum of “shared” space to dedicated space, and the decisions a firm makes as it matures as to whether they end up in a traditional office, a flexible work environment or, more likely, a combination of the two.

Individuals or small companies may find shared open space sufficient for their operations. However, as companies grow, the may require dedicated space to house proprietary equipment or to support day to day continuity. Others may prefer space which they can lock up and leave work in progress.

Enterprises may use flexible office as drop-in or convening space if their workforce is usually mobile. Once they scale in a location or have staff who are largely office-based, they may seek some private assigned space, while still taking advantage of the communal amenities and workplace services provided. Providers are increasingly competing upon multiple variations of shared and dedicated space, and it is the ability to increasingly customize that space for specific tenant needs that is increasing the attractiveness of these providers to enterprise customers. In a large multi-location portfolio, a mix of both traditional office space and flexible office space is becoming more common.

The first matrix shows the user entities on the x axis, and the product types on the y axis. The second matrix shows which service providers provide which services and experiences.

Customer Type

**Competitor Matrix is not exhaustive, but indicative of what occupiers would typically see in the U.S.

Three firms provide all types of space to all user types. IWG, formerly known as Regus, has a long-standing history of providing all different product types to all different types of user in all types of markets. WeWork, with significant financial backing, can be found globally in most Tier 1 cities. Convene, by starting with an emphasis on providing conference and amenity space, has carved itself a niche by being an alternative to WeWork. Other providers, specifically breather and Servcorp, see opportunities in providing high quality amenity and touchdown space to all user types, while Knotel focuses strictly on fitting out and managing space on behalf of businesses. Industrious both fits out and manages space for organizations, depending if they want their own separate suite or floor.

Implications for Deploying a Flexible Office Strategy

Deploying a flexible office strategy across an entire portfolio will undoubtedly impact the following key corporate real estate functions for occupiers:

We will discuss these issues in subsequent articles. As a baseline, understanding the types of users, types of experience models, reasons for using flexible office and the continuums of shared and dedicated space will help occupiers to determine which mix of flexible and traditional office is right for them.

About the Authors:

This article was authored by Ron Zappile, Vice President,  in Colliers’ Corporate Solutions Strategy and Innovation where he focuses on delivering high quality portfolio and workplace optimization plans for corporate and institutional clients.