Flexible office space during Covid-19

Let’s face it; what coronavirus pandemic has brought to the nation is nothing but scary thoughts, calling to mind the 9/11 or the 2008 financial crisis. And it’s even worse because we don’t know when the situation will change, for as long as there is no cure, the situation will continue to get worse. It is a catastrophe that has reshaped everything, crippled the economy, but what’s worse is the uncertainty surrounding the virus. Governments all over the world have scrambled to slow the spread of the virus with measures such as mandatory quarantine requiring people to work from home.

Industries across the country have been affected adversely, but while the virus has not gone easy on flexible office providers, it seems that not even it can stop the demand for flexibility when it comes to office space. Even with the customers today working from home, and their leases coming to a rapid lapse, companies offering short-term office spaces are on the ropes compared to the traditional office operators who lease for longer periods. In the face of flagging revenue, the flexible office companies are taking drastic measures to cut the costs, with some providers laying as much as half of their staff.

This has been a major setback for these companies, but despite the hiccup, some of the industry professionals believe that in the long run, the pandemic will not do any real damage to the “realestate-as-a-service” models. They believe that the post corona pandemic could see elevated demand for flexible office space.

“This is no doubt a severe stress test to the business model,” said Michael Kloppenburg, senior consultant for flexible office solutions at Avison Young. “But the strong operators and owners positioned to survive the effects of this crisis will be rewarded with even greater focus by enterprise occupiers looking to apply flexibility to their real estate portfolios.”

For the past ten years, Kloppenburg has been tracking the rise and use of the real-estate-as-aservice concept watching their spread from shared officers to sprawling on-demand suites rented by the nation’s largest companies. The momentum of their use should not only survive, but thrive on the other side of this pandemic.

New as it might seem to be, real estate as a service is not that new. The concept has been around for almost 30 years, well portrayed by companies like Regus and other traditional executive suite providers turn to managed office spaces on flexible terms for business seeking an alternative to traditional long-term office leases.

However, this concept would become much more popular in the last five years, evolving so much to focus more on the tenant experience with creative,

“These concepts are now bleeding into the traditional office sector,” Kloppenburg said. “Even among the world’s largest firms, there is an undeniable market demand for flexibility and enhanced tenant experience, which we expect to continue beyond the near-term negative economic impact of COVID-19.”

Coming out of this crisis, there is a greater likelihood that businesses might turn to flexible office solutions even more. It is expected, especially if the recovery is slow and halting pushing companies to shorter-term, flexible leases that they can easily exit if they are forced to send employees home.

While the pandemic means bad news for industries and enterprises all over the country, it might open them up to a different office solution. With most of the employees working from home, Kloppenburg said that companies might lean more to a consistent remote working environment, shifting from the traditional offices, or even placing their employees in a more geographically dispersed flexible office.

If the pandemic pushes business to their breaking points, some landlords will have a vacant space in their buildings. This means they will have to consider the possibility of turning those areas into a flexible

working space. And while it may not be under the happiest of circumstances, Kloppenburg said that the Coronavirus may provide business owners with a staging ground for the biggest experiment in coworking we will ever experience.”

The rise of the flexible office spaces has spawned dozens of different models for how to create a managed office space, and the model that the landlords choose could be the difference between bringing in crucial revenue in a time of crisis or opening up a money pit inside their buildings.

Current flexible office providers should not underestimate the difficulties of the current economy. According to Kloppenburg, the coming office crunch will create both winners and losers, leading to consolidation among the coworking providers before we see proliferation as institutional owners participate more actively.

https://www.bisnow.com/washington-dc/news/coworking/ even-coronavirus-may-not-quell-appetite-for-flexibleoffice-space-103680 https://www.zdnet.com/article/could-covid-19-change-thelook-of-the-office-as-we-know-it/ https://www.politico.com/news/magazine/2020/03/19/ coronavirus-effect-economy-life-society-analysiscovid-135579

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