How flexible space is leading companies to rethink their real estate

More European companies are experimenting with flexible office space to cater for 21st century work life and better position themselves in a fast-paced business environment.

November 09, 2018

As today’s companies aim to become more agile and their workforce becomes more mobile, their space requirements are changing fast.

While the majority of their real estate portfolio is still made up of longer-term fixed leases, growing numbers of companies are experimenting with flexible office space to get the most from their employees and best position themselves in a fast-paced, rapidly-evolving business world.

“Flexible office space helps them to attract specific talent pools, particularly younger generations, who tend to favour a less traditional corporate office setting while meeting the requirements of specific teams in areas such as digital or product innovation,” says Tom Carroll, Head of EMEA Corporate Research at JLL.

“For some companies, flexible office space enables them to act quickly if they need a temporary space, or to access a new market. For others, it’s an opportunity to increase exposure to the zeitgeist in a particular industry or to help change their working culture.”

Back in 2015, JLL predicted up to 30 percent of corporate portfolios could be co-working or flexible space by 2030 – a figure supported by its latest report Flexible Space: Transforming real estate.

And with Europe’s flex space market growing rapidly – up by as much as 35 percent a year over the last three years, and with further growth on the cards – companies have never had more choice in finding additional space that meets their unique needs.

Catering for 21st century work life

The new generation of flexible space is shifting corporate attitudes with both coworking providers and landlord-created platforms providing high-quality, amenity-rich workspaces that go well beyond merely offering bottomless coffee and a desk. Instead, their networking events, social and dining areas and creative designs promote a sense of community and encourage collaboration.

And although new formats are springing up across Europe and the rest of the world, Carroll believes more could be done to entice companies. “Integrated technology, workplace data analytics and space utilisation improvements could also significantly drive demand,” he says.

“If flex space or coworking providers can demonstrate sustained evidence of improvements in how companies are getting more from the spaces they lease, and this can be scaled, we will see an acceleration in enterprise adoption.”

In the meantime, these new models are addressing some of the cost concerns that made many corporates reluctant to adopt flexible space in previous years.

“With the new generation of flex space, users tell us that, in some cases, it’s cheaper to embrace flexible office space than commit to a conventional lease, along with all the operational and capital expenses it might incur,” says Carroll. “Some providers are offering innovative pricing and deal structures as they seek to boost demand, although the long term viability of these remain untested.”

However, Carroll adds that for many companies, cost is not their first consideration as they place a higher premium on bringing different teams together.

Concerns also remain over other aspects of flexible space arrangements, whether security, confidentiality and privacy in more open environments, brand dilution or the quality of the fit-out.

Yet on the flipside, as flex space becomes more mainstream, there’s the risk of being behind the curve. “As increased mobility, superior connectivity, state of the art fit out and a range of leisure and hospitality services become the norm, no company wants to be perceived as stale,” says Carroll.

Finding the right balance

Although more companies are considering or trialling flex space, it’s far from being a one-size-fits-all solution and won’t be the right move for every company, especially those who are very conservative in their real estate operations and outlook.

Indeed, even companies who are more experimental will differ significantly in the way they take-up flexible space.

“We see a range of strategies emerging based on the needs of individual businesses and even teams. While experimentation continues, and provision remains embryonic in some areas, the appetite for flexible space from SMEs to multinationals is increasingly clear cut,” concludes Carroll.

“It’s likely that, as we see larger and more ‘traditional’ companies deploying these concepts at scale, we will see a swift shift along the adoption curve for more conservative adopters.”

With today’s office furniture ranging from the gimmicky to the purely functional, the style that companies opt for sends visual cues about their brand, not to mention impacting on office ambiance and employee productivity.

It’s not just tech and creative set-ups getting experimental in their color and design choices. More professional services and financial services firms are kitting out their offices with standing desks, beanbag chairs and abundant indoor greenery.

While hammocks and deckchairs may prove a talking point in communal areas, furniture needs to support and reflect the task being carried out, says Neil Thomas, interior design team leader at Tétris UK, a JLL subsidary.

“Offering a bright, vibrant workplace has a big impact on attractiveness, particularly for companies employing younger staff – as well as an image for external visitors,” says Thomas. “Furniture creates interest and enables the introduction of color and texture. Interfaced with technology it transforms environments.”

“But with businesses looking to optimize their space and reduce the overall number of desks, the type of furniture being used around the office bears both a tangible and indirect cost.”

Furniture can account for between 10 and 25 percent of overall fit-out costs. And there’s more choice than ever before. The global office furniture market, including computer desks and swivel chairs, as well as workspace storage units, is growing with companies expected to spend US$84 billion by 2021, according to Statista.

Getting the right mix of office furniture is an investment in its own right, says Thomas, but while design trends come and go, what’s really important is ensuring the basics like desks and seating meet employee needs and make the most of the available space.

“Companies need to evaluate which types of furniture best support their employees’ day-to-day activities,” says Thomas. “For the employer, it’s about trusting your workforce and accepting that they don’t always have to be at their desks to do their job.”

There is, says Thomas, the risk that companies can get swept along by designs, such as sit-stand desks, that are not used to their maximum benefit.

“When sit-stand desks are consistently used in sitting mode – defeating their intended purpose – it may now be the time for areas to exist and booking systems put in place,” says Thomas.

Boosting productivity

The rewards of creating high-quality areas for collaboration or for private working are higher productivity levels.

Even the use of no furniture can help in certain office scenarios, says Thomas.

“Take an internal team meeting, for example. A company can wrap up a weekly meeting in 30 minutes if a team is stood rather than seated. That then becomes a productivity factor – as well as the blunt cost saving of less chairs.”

Furthermore, plants and even living walls also have a role to play. Numerous studies have found that those who work in environments with natural elements such as plants and wood have higher levels of productivity and wellbeing.

“It’s not just about putting plants on desks next to windows,” says Thomas, pointing to the concept of biophilic office design. “Greenery can be used as space dividers between work areas while it can also help to add color and create a positive first impression in lobbies.”

Multi-functional spaces

Companies with more limited fit-out budgets need to think creatively about how they use the same furniture for different purposes, says Thomas: “Kitchen furniture, for example, can be used for internal meetings if designed correctly”.

Yet what works for internal meetings often won’t work for client-facing areas. “Designated client areas are configured so that the furniture reflects the meeting,” Thomas says.

But that’s not to say companies can’t show off stylish internal areas.

“When a client only sits on one chair and sees just one room of a five-floor building during a visit, their image of a company risks being somewhat limited,” Thomas adds. “Whereas if you can show – and, in some cases, even host – that client, their experience will be more memorable and potentially lead-generating.”

Meanwhile, easily movable furniture can assist companies who regularly hold internal and external events.

“If an office is configured correctly and furniture is not so rigidly arranged, then quarterly update meetings, as well as evening presentations, can be held in-house,” Thomas says. “Over the course of the year, that can result in not insignificant cost savings.”

However furniture is positioned within the office, ensuring that employees have the privacy and the personal space they need to get their work done is key. And in modern offices, design choices also need to accommodate technology and wiring for maximum connectivity.

“Today’s office spaces can look good but above all they must be fit for purpose if companies and employees are to get the most from them,” says Thomas.

As the nature of work evolves, office furniture is changing to keep pace but the basics – a good desk, supportive chairs and comfortable break-out areas are still the essential design elements.

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