Flex: Friend or foe to the traditional office market?

Demand for flex space is on the rise in Europe as return to office policies take hold

September 28, 2023
  • Atalanti Angelopoulou
  • Melissa Ansley

The benefits and limitations of flexible space solutions for corporates have long been debated, from location and size to security.

Now, as many companies grapple with their return-to-office policies, hybrid work solutions and an overall flight to quality, flex is set to play an integral role. In the employee journey back to the office, ample choice is important, underlining the importance of flex in the overall commercial real estate mix.

According to JLL’s Future of Work Survey, 42% of corporate occupiers plan to use flexible space more within the next three years, while over half of organisations prefer to lease flexible space through a third party.

In the face of such demand, it begs the question; is flex a friend to the traditional real estate market - or foe?

Source: JLL *JLL has seen an increase in occupier moves towards Grade A premises as some ditch their capacity space (mainly in non-central areas). Around 12 million sqm of leases are set to expire in Europe over the next five years and many tenants will look to upgrade their office space.

Flex provides occupiers with a bridge to quality

The flex sector is seeing increased demand from large corporates for flexible space, well beyond the typical use cases of market entries, speed, and small offices. Take central London, where JLL’s Flex team has been involved in 78 live instructions so far this year. Flex has been used as the bridge to support occupiers who are repurposing or relocating into better quality spaces, while continuing to provide highly amenitised and productive work environments. Demand remains dominated by the technology and finance sectors, which account for 68% of JLL’s total number of flex transactions in London.

As occupiers continue to fine-tune their return-to-work policies while trying to understand their ideal footprint, we’ve seen flex playing a tactical role, particularly in London, where most transactions completed in 2023 are being leveraged for terms of two to three years.

While demand from large corporates will continue to support the flex market, small to medium businesses are still the core drivers. Flex plays a stronger strategic role in their business growth and enables them to access high-quality, well-located offices often not available through traditional leases. That being the case, we expect a large share of requirements up to 1,000 sqm to move towards flex solutions.

Flex continues to be a vital piece of the puzzle in supporting all types of occupiers, both tactically and as part of a wider real estate strategy. By enabling optimised office occupancy, providing amenity driven spaces and allowing organisations to quickly adapt to changing demands, the flex sector continues to be crucial for the overall market.

With the return to office in full swing and a constrained pipeline of grade-A quality space coming to market, it's clear that traditional office leasing and flex will remain friends, not foes, for the foreseeable future.