Flex space is increasingly viewed by occupiers and landlords as a need-to-have instead of a temporary solution. And just like in the office market as a whole, there’s a flight to quality in flex office spaces. Flex space demand has surged recently with the shift to hybrid work, and a shrunken set of options to choose from has led to higher asking rents, according to a report from Workthere, Savills’ tech-enabled flexible office brokerage.
New York and San Francisco, not surprisingly, have emerged as the most expensive flex office markets worldwide, and Berlin is the fastest-growing market in Europe. Private office co-working desk spaces in NYC cost an average of $961 monthly, followed by San Francisco at $950 per month. The other cities in the top 10 for most expensive flex space include Singapore, London, Berlin, Austin, and Paris. It’s no secret employers are trying to lure employees away from remote work to high-quality office spaces, and this trend is applying to co-working spaces, too, according to Griffin Foley, Northeast Lead for Workthere Americas.
While occupancy rates in the traditional office market are still generally low, the flexible market has performed better after a brief pandemic-induced dip in 2020. For example, Berlin’s flex market has limited supply with a current vacancy rate of 3.5 percent. Flex market growth is being driven by the science, digital, and tech sectors, and the market as a whole only saw a 1.4 percent decrease in space in the past two years, Workthere says.
Landlords are adding more flex spaces to their product mixes to meet the occupier demand, which should continue in 2022, barring unforeseen circumstances. A recent Colliers International report predicts that more flex products will be offered this year, including more landlords developing their own flex products. The “work-from-anywhere” trend has drastically changed the office, and competition for flex space could be heating up even more soon.