Just two months into the pandemic, industry leaders met to discuss how the industry would weather the storm. In a special follow up event they reflected on the last eight months and considered what’s next for the flexible workspace industry.
- Liz Elam, Executive Director of GCUC
- John Williams, CMO of Instant Offices
- Mark Furness, CEO of essensys
Here are the key insights you need to know. For the full recording, click here.
Demand is Pending
John Williams began the conversation predicting a bold 21% increase in global supply in 2021. Referencing insight from Instant Offices around customer expansion plans, he stated, “there’s a pervasive sense of bullishness in the market.” He also cited the increased demand for suburban locations, which are holding strong in both pricing and contractual occupancy.
However, many operators are still feeling the pain, especially those in high growth mode, noted Mark Furness, referencing single digit occupancy rates recorded in the early days of the pandemic. In the US market, while it has climbed slightly, it started to plateau in October. Meanwhile, in the UK, the second lockdown saw a 15 to 20% drop in real-time occupancy.
Although the situation has been touch-and-go, there’s cause for optimism. Furness cited a recent CBRE survey in which 86% of occupiers responded that flex would be a focus of their portfolio, up from 73% less than a year ago. Demand is pending. The panelists are optimistic about growth in the second half of 2021.
According to Furness, “Those who survive will thrive,”. He continued to say that space providers are “evolving products to meet a slightly changed demand side.” He expects more activity from the landlord side to meet new requirements. For pure-play flex providers with less capital-intensive models, the opportunity is through alliances, platform plays, and franchise models.
The Office Sector is Changing
While growth is imminent, the dynamics of the office sector are changing. Liz Elam asserts that the choice has flipped from the employer to the employee in terms of where people work, which is impacting how the office is evolving.
John Williams agreed. He contrasted this recession to the previous one. In this recession, there’s a demand for new spaces to accommodate where employees want to work from, mainly in suburban locations, while continuing to work some of the time from the employer’s office. He referenced Google’s recent announcement about the move towards a hybrid working model. This distributed working model is driving smaller operators to capitalize on suburban locations and even apply for funding and investment, pointing to optimism in the market.
The office sector will continue to evolve into networks of locations. Each location will have to tick the boxes of occupiers’ evolving requirements. For those in scale mode, building a network model requires deep pockets and the right tools to aggregate the experience. Space providers need to think beyond the real estate element and consider the infrastructure and technology that support both scale and expertise.
Advancing the Market
Confidence in the industry will come from a show of strength and innovation. Our panelists offered key points to consider when seizing the opportunity at hand:
- Agility and Flexibility
Think about space requirements and what today and tomorrow’s occupiers need to do their work. How are you planning now for future market changes?
Wellness is more critical than ever in today’s workplace. Consider how you can leverage PropTech to keep spaces safe and healthy for occupiers.
Flex-spaces can be a boost to downtown and high street areas. Workplace communities can generate new businesses and services, generating jobs, footfall, and creating community.
- Who will Bring the Growth?
With demand in the pipeline, now is the time to identify where activity will stem from and how you can get involved. Think landlord partnerships, new regional opportunities, or hub locations.
With economic uncertainty, employers know they need flexibility and are eager to leverage as-a-service models. But systems and processes must be efficient and straightforward.
Workplace interactions and agreements are increasingly transactional. People want quick access to space and services in productive environments. Technology can reduce friction and minimize touch-points throughout the journey to keep occupiers happy at work.
- A Shift in Consumption Patterns
How people utilize space is rapidly changing. As people return to the office over time, the entire workspace experience must include easily accessible services and quick and efficient moves, adds, and changes when necessary.
Tech is essential to foster contactless experiences and offer real-time access to spaces, network models, and insights on space occupancy.
- Digital Security Infrastructure
This critical component to tech infrastructure must be addressed. Security is a recurring requirement for occupiers of all sizes and can make or break a proposition. Learn more about digital and physical security.