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Now that we have a roadmap out of lockdown, it is the question on everyone's lips, what happens next regarding going back to work?
Richard Smith, Founder and CEO of Office Freedom, The UK and Global Tenant-Rep Property Agent Specialising in Flex and the first property agent to specialise in flexible workspace in the UK, joins us to share his observations.
There has been much debate about the future of the office in today’s pandemic world, particularly in reference to agile working and flexible workspace versus traditional leasing. There’s no doubt that a sea of change is upon us.
Even prior to the pandemic, the flexible workspace/serviced office sector, which was once a cottage industry, had evolved into an integral part of the UK and global office space landscape. A viable alternative to traditional leasing - embraced by large corporations as well as SMEs, start-ups and small businesses. Post lockdown, I have no doubt that this will accelerate at warp speed!
Serviced Offices of yesterday have evolved into…
The industry started around 1966 in the US and in 1979 in the UK – it appealed primarily to start-ups and small businesses. Ready to move into offices on simple, easy-in easy-out inclusive agreements. However, there were issues that stunted the growth of the industry: branding (the name of the provider was too prominent); size or lack of (the industry could not accommodate large requirements); the wow factor was missing from the look and feel; technology was not of a high enough standard; a lack of amenities and facilities to support staff wellness.
…the flexible workspace of today.
To give credit where it’s due, the sector has reinvented itself. High tech fit-out, ergonomic design and private self-contained space engineered for productivity and cultivated for wellness are the flexible workspace environments of the 21st century.
As a result, the sector is now full of predominantly unbranded space that can now accommodate much larger requirements, providing high-end contemporary offices with state-of-the-art technology, amenities and facilities that are ideal platforms for nurturing and retaining the existing team and attracting the best new talent.
Nowadays, the industry attracts large corporations, enterprise companies, tech, finance, pretty much all business types - even traditional sectors such as legal and accounting, who have previously shown little appetite for flex, have been unable to resist its charms.
Flexible office space/serviced offices = office space
Flexible space is just regular office space, private and secure as you would expect, just more flexible and without the costly elements of old-fashioned leases i.e.:
- flexible short-term agreements instead of long-term onerous leases;
- zero or nominal build-out expenses instead of expensive fit-out costs;
- fixed pricing/nominal index-linked increases instead of upward only rent reviews;
- simple license agreements instead of painful 100-page leases;
- zero or nominal reinstatement instead of expensive dilapidation costs;
- the ability to upsize, downsize or relocate at short notice as opposed to leases on a fixed amount of space, so when there is staff movement in either direction, you are either swimming in the space or bursting at the seams;
- to be able to outsource your FM releases so much time and energy;
- the laws have changed regarding accounting for leases; IFRS 16 require tenants to account for leases on their balance sheets as liabilities, except for leases with a maximum term of twelve months or less i.e. flexible 12 month rolling agreements
The flexible solution also enables companies to rent much less space than they would need in a traditional lease, ballpark 50-75% (i.e. you don’t need to rent space for: break-out areas; reception/meet and greet area; meeting rooms available on pay-as-you-go; kitchen facilities; event spaces; gyms; libraries etc) so all of a sudden when the rate per square foot for flex is higher but you only need half the space, the costs of flex are more reasonable than people realise – it’s all about the total occupancy cost!
Hub and Spoke - A mix of central business districts (hub) and suburban (spoke)
It is estimated that almost five million people will be taking on flexible spaces by 2024, an increase of 158% compared to 2020. These projections reflect not only growth within the industry but a trend towards more flexible and remote working practices across the globe.
The pandemic has brought with it, a massive change and disruption which has highlighted the importance of incorporating future planning into business models, including re-evaluating and minimising non-essentials. For corporations with multiple locations, adopting flexible workspace helps them stay agile, providing a financial buffer to lower operational costs and capital expenditure. Flexible work practices and workspaces are key trends predicted to accelerate given the experiences of Covid-19, with many business leaders being urged to develop hybrid strategies with flexible arrangements. Companies are seeking to adapt rapidly to accommodate a more remote workforce and are seeking agile workspace solutions and turning away from the confines of traditional long-term leases. Flexible workspace providers are rapidly emerging as the preferred option to provide businesses with flexible contract terms and Covid-compliant, safe, controlled, collaborative and productive spaces.
Some major hubs such as London and Manhattan have over 1000 Flexible Office Locations in each city. With over 15,000 globally, with so much choice and variety, where do you even begin?
Flexible Workspaces, like anything else in life, come in all shapes and sizes and look and feel – trendy, contemporary, raw, rustic, modern, traditional, single storey, or skyscrapers and everything in between - a complete plethora of options. Some that provide free beer and wine in the afternoons and some that certainly don’t – some that have members in shorts, T-shirt, and flop flops and some that certainly don’t!
The total number of flexible workspaces globally is predicted to more than double over the next four years to over 40,000. Companies large and small are taking a fresh look at flexible workspace and finding that it provides the solutions for their needs. As we emerge from lockdown, we should be forever wary of long-term commitments.
One of the reasons that the flex market has accelerated so much in recent years is because of its benefits to staff wellbeing, welfare and mental health.
We will all be permanently scarred by the Covid experience. I hope that the silver lining to this very dark cloud will be that the world can be a more united place – why not? When else has the entire global population, all endured the same thing at the same time? We have all suffered in some way shape or form: mentally, financially … preserving precious capital, reducing overhead and providing our staff with agile working options and flexible workspaces that make them happy – these surely need to be our priorities moving forward.
Since the recent announcement regarding the roadmap out of lockdown, there has been a noticeable increase in activity, confidence and demand for agile and flexible office space. Office Freedom is one such company that is helping companies find flexible office space anywhere in the world. To speak to them about your requirements, contact Richard at firstname.lastname@example.org, on 07767 211 112 or visit www.officefreedom.com.Back to top