Workthere’s Flexible Office Provider Sentiment Survey provides a snapshot of the current market conditions in this sector and the associated impacts of COVID-19. Data is collated over 101 responses from a variety of providers in 11 countries around the world to understand their sentiment on what the short- and long-term picture looks like for flexible offices.
Dom Harding, head of Workthere, Americas said
Prior to the onset of COVID-19, occupancy for providers in North America sat around 72% on average. Survey respondents expected contract occupancy to be at 68% by the end of May. The survey also found that 31% of flexible office users in North America have asked for rent relief. Despite the current environment, a majority of providers felt optimistic towards the sector over the next 12 months.
Jess Alderson, global research analyst at Workthere, said
It is encouraging to see an optimistic bias for the 12-month outlook and global occupancy levels over 70%. It is also interesting to see the responses from Asia, which is at a different point in the pandemic cycle, against those in Europe and North America.
Globally, flexible office occupancy before COVID-19 was at an average of 83% and is expected to dip to 71% by June. Current enquiries for this type of space are at 20% of normal levels worldwide with Asia seeing a greater proportion of clients not renewing contracts at 27%, compared with 13% in Europe and 12% in North America. However, Asia has seen higher levels of inquiries so far in April at 33% of the normal levels against 16% and 19% in Europe and North America respectively.
The study also showed that 33% of members globally have asked for some form of rent relief, and this number is consistent across all regions. The most common form of relief granted by providers to members include deferring rent for a month and extending the licence agreements; allowing members to downsize space and a 20-50% rental discount for one month.
Cal Lee, global head of Workthere said
The flex market is clearly exposed in the short-term to any market impacts such as what we are witnessing with COVID-19. It is at risk from companies that are not renewing contracts as they go into survival mode and we expect that these figures will rise come the next survey in May as more members seek help putting further pressure on providers.
For now, teamwork is paramount in ensuring the relationship between landlord, operator and customer continues to run smoothly as businesses begin to think about returning to work and what that might look like. Those providers that work with their customers to help them through this time are likely to see a return of loyalty by that customer in the years ahead. The sector is in a good position to bounce back in the short term and looking forward to the longer term prospects, it is set to play a vital role as office occupiers look to the flex market in order to diversify and add resilience to their occupational portfolio.