Are Flexible Workspaces the answer to the crisis?



The fact that for almost every industry, everyday working and office life has changed since the COVID 19 crisis is particularly significant for the concept of flexible office space. Previously, this concept had experienced a real boom, which is why it is questionable whether it is now likely to stumble in the face of the pandemic-related economic slump and whether consolidation is approaching instead of expansion. After all, the current situation is a challenge from both the provider and the user perspective.

Short-term effects on the market are already apparent: According to the latest Workthere survey, the utilisation of flexible office space in the COVID 19 crisis has fallen by 14% compared to pre-pandemic levels. By the end of June, the respondents forecast an average occupancy rate of 69 %. However, this is especially true for the subsegment "coworking": Here the fluctuation of users is particularly high, and desk-sharing models also ensure an immense amount of hygiene. Closed corporate areas, on the other hand, which are increasingly being used by corporations and SMEs for project groups or outsourced back office locations as a variable supplement, are much easier to handle in this respect. There are fewer desk changes and the respective user has better control over compliance with pandemic standards.

The fact that a comparatively large part of the space is now taken up by such sites and that the core target group of startups and freelancers has thus been diversified, also has enormous advantages in crisis phases: Corporates usually conclude longer rental contracts and partially maintain the occupancy rate even during the pandemic. The risk of default is therefore lower. The segment's transformation from a former start-up hub to a variable corporate space ensures that flexible workspaces will continue to exist post-pandemic - possibly even experiencing more demand than before.

In addition, home office concepts have become established in many companies in recent months. However, not everyone is technically and spatially well positioned at home to allow for easy working from home. Flexible variants could therefore increasingly serve as an alternative and thus not only be an alternative to conventional offices, but also an alternative to the home office. Concepts close to home are particularly convincing here.

However, the fact that the demand for classic office space is really declining as a result remains purely speculative. However, it is clear that the working worlds as we know them today are changing drastically and that especially the flexible character of the concept has many advantages in times of crisis. That is why providers are optimistic about the future. After all, in precarious times like these, flexibility is a high priority for companies, not only in terms of flexible jobs, but also in terms of variable costs. This means that small companies can always adapt to current conditions, in other words, they can actually only rent the number of office spaces they need. Although some investors have so far been reluctant to invest in single-tenant properties with flexible workspaces, many see this as a long-term prospect in view of current developments.

As a result, it is quite possible that companies will more frequently rent flexible office space in the future and reduce the originally rented, traditional office space. The Corona crisis has therefore had some positive consequences for this concept. There is a lot of hope that flexible office space will become more important in the long term. This means that the concept can benefit from the crisis, even if it is unlikely to leave it unscathed.