Flex Office Providers’ Optimism Returns in October, Though Short-Term Concerns Remain

Workthere’s fourth Global Flexible Office Provider Sentiment Survey results show increased confidence in the sector among North American providers over the next twelve months. NEW YORK (November 13, 2020) – The fourth Global Flexible Office Sentiment Survey by Workthere, Savills’ dedicated flexible office advisory service, revealed an uptick in positive sentiment for the flexible office sector among providers in North America over the next twelve months. While members still expressed some uncertainty about the state of the market in the shorter term, the increase in optimism likely results from a decrease in the percentage of members seeking rent relief (down to 29% from 39% in July) as well as a decrease in the percentage of members not renewing contracts (21%, down from 28% in July).

Workthere Americas National Director Ted Skirbunt said:

What we’re seeing as we progress through this pandemic period is that market participants are behaving rationally in the face of uncertainty. Many small to mid-sized tenants are not renewing traditional leases upon expiration, seeking more flexible solutions, and there are more opportunities out there to secure flexible space at deep discounts to even just a few months ago.

Data indicated that, globally, 42% of flex office providers were optimistic toward the sector for the next three months, a slight increase from the 40% that reported a positive sentiment in the July survey. The long-term outlook was significantly more positive, with 76% of respondents reporting optimism about the flex market over the next 12 months.

The survey also revealed that contract occupancy in the flexible office sector in North America is expected to be at an average of 55% at the end of November, compared to 80% before the pandemic. In a continuing positive trend, monthly inquiries for space across the region increased again to 43% of normal levels compared to 37% in July and just 13% in May. Globally, providers expect contract occupancy to reach 65% at the end of November, and inquiries are at 54% of pre-COVID-19 levels.

Cal Lee, global head of Workthere, comments:

Whilst we have seen a dip in contract occupancy expectations, actual building occupancy and enquiry levels are moving in the right direction and we have seen both steadily increasing since we started our provider sentiment survey in April this year. If these figures continue on the same trajectory, it should result in the market bottoming out, allowing a recovery to begin in the sector. We have talked a lot about the potential of the flexible office moving forward, in particular its ability to capitalise on firms looking to diversify their office portfolio and incorporate more flexibility into their lease terms, we anticipate that this will start to filter through as the market begins to adapt.

Flex office members seeking rent relief dropped to 22% globally, down from 27% in the previous survey. This figure stands at 29% in North America, down from 39% in July.

Note to editors: Workthere’s analysis is based on 131 responses from providers located across the globe including Canada, The Czech Republic, France, Germany, Ireland, Spain, The Netherlands, The United Kingdom, The United States and Vietnam. The data was collected via an online survey that we sent by email to flexible office providers. Data was collected during the period of 5th October 2020 to 9th October 2020.  A ‘member’ is defined as one membership agreement. This could be for one person or one membership agreement for 150 people.