Why property management companies create flex office spaces

Over 41,000.

That's the number of shared coworking spaces expected to exist globally by 2024, more than double the amount in 2022 (Coworking Resources, 2022 Global Coworking Growth Study). 

This explosion in flexible office space reflects a monumental shift in how we work and occupy offices. That’s not to say that the days of vast seas of cubicles and idle corner offices are gone. They’re just not the standard anymore. The future of work is all about communal amenities, mobility, and working closer to home. 

These benefits are the core of coworking. And property management companies and office tenants are adapting to leverage it. But is this just a fleeting trend? Or are flexible workspaces fundamentally changing office real estate as we know it? (Considering Coworks is a coworking space management platform, I think you know where we stand… but let’s explore it anyway.)

The rise of flexible workspaces

Coworking took off over the last decade, driven by startups and remote workers looking for cost-effective, communal places to work outside a traditional office. WeWork and other coworking providers tapped into this demand, leasing office space and dividing it into shared desks and meeting rooms.

The initial growth was encouraging. Between 2015 to 2019, the number of flex office locations tripled globally (JLL). But when WeWork's plans for even more rapid expansion failed in 2019, some predicted the coworking bubble would burst.

Instead, hybrid work accelerated the demand for flex space, particularly in the face of companies requiring a return to office. Employees enjoy the amenities and community coworking affords. And companies utilize it to complement traditional offices and cut their footprint. The flex office market is now projected to double from over 25,000 spaces in 2022 to 40,000 by 2024 (ResearchAndMarkets.com).

What’s in it for property managers?

Property management companies have operated for decades leasing large blocks of office space through long-term agreements. But static 10+ year leases are a model of the past. Today's workforce and businesses demand flexibility.

For example, Propmodo cites that "Houston is among those markets where the office sector is struggling the most. The city recorded an office vacancy rate of 22.1 percent in the second quarter, one of the highest vacancy rates in the country, due in no small part to undesirable Class B properties in the CBD. Houston’s retail sector, on the other hand, is a study in contrast, with a vacancy rate of 4.9 percent, just a bit above the national average retail vacancy rate of 4.2 percent."

This leaves property managers with a dilemma — how to adapt their aging buildings to attract and retain tenants in a rapidly evolving market? Empty floors or half-vacant offices are wasted potential.

Creating their own coworking spaces allows property managers to monetize every last square foot. Instead of leaving valuable space idle, they can create shared offices, dedicated desks, meeting rooms, event spaces and more. Small businesses or remote workers that don't require a whole floor can now be tenants.

Strategically placed coworking also activates building lobbies and common areas. What was once "dead" space can become a revenue generator with grab-and-go cafes, lounges, and workspaces.

Shared spaces also connect property managers to the local business community. They create a pipeline to tomorrow's enterprise tenants. And networking events and partnerships engage the neighborhood.

In a landscape where businesses and employees expect flexibility, coworking gives property management companies a path to stay relevant. They can leverage space efficiently, create connected communities, and embrace the future of office real estate.

More tenants and leasing optionality

By having shared desks and private offices in coworking areas, you can lease space to more potential tenants. Small teams or individual employees that don't need a whole suite can rent just what they need.

Built-in amenities

Well-equipped coworking spaces provide amenities that attract tenants and allow you to charge premium rates, without the overhead of managing lots of individual tenant improvements.

Future-proof your buildings

Coworking space better accommodates uncertain growth. Tenants can flexibly add a few desks or offices as needed vs. managing large block leases.

Member-to-tenant pipeline

As members grow their businesses in the coworking space, a percentage will outgrow the space and become full office tenants. Coworking creates a pipeline for potential long-term tenants.

Coworking also helps ensure your space stays relevant. 66% of tenants now want mobile app-enabled, tech-forward office experiences (JLL). Shared spaces allow you to cost-effectively provide features like smart access control and meeting room tablets.

What’s in it for consumers?

For decades, the expectation was that employees would commute every day to a company's headquarters or regional office campus. But today's workforce is rejecting this rigid structure in favor of flexibility and autonomy. 

Studies show 70% of professionals work remotely at least one day per week. The average American commute time to and from work is 55 minutes. Given that Americans spend an average of 27.6 minutes traveling one way, that means it takes nearly an hour for them to commute both ways each day. In fact, traveling 55 minutes per day equates to over 333 hours per year (Nearly two weeks of your life lost to commuting).

This has fueled demand for "third spaces" closer to where people live and closer to where their families function. Shared coworking spaces provide the ideal solution with amenities superior to working from home or a crowded café.

Coworking offers remote professionals:

• A dedicated workspace without distractions from home life
• On demand access to meeting rooms and event space
• Community and collaboration with other members 
• On-site tech support and administrative assistance
• Opportunities for networking, mentoring, and skill-building 
• The flexibility to work fluidly across locations

For the growing remote and hybrid workforce, coworking spaces provide the ideal third place. They trade wasted commute time for enhanced productivity and valuable connections.

As consumer preferences move away from rigid office life, coworking gives employees a self-directed, energizing alternative. The future of work is local, flexible, and driven by autonomy.

Lower cost to enter/exit 

Coworking offers flexible month-to-month agreements. New and small businesses can quickly enter a market and ramp up office space as they grow.

Access to amenities

Tenants get access to amenities like lounges, cafes, fitness centers, and high-end AV equipment at no additional cost.

Networking and events

58% of coworking members say networking opportunities are extremely important (CoworkingResources.org). Shared spaces enable this with open layouts and community events.

What’s in it for the planet?

Shared workspaces also enable property managers to operate their buildings more sustainably. This appeals to eco-conscious tenants and helps meet environmental goals:

• Coworking spaces have 25-50% less energy usage per person compared to traditional offices (Rocky Mountain Institute). Open floor plans require less lighting, ventilation and climate control.
• Shared amenities in coworking spaces like meeting rooms and lounges reduce redundant resources. There is less overprovisioning of space that sits vacant.
• Coworking members commute 32% less by working closer to home on average. This reduces greenhouse gas emissions by 6,000 tons annually in Washington D.C. alone (DeskMag, 2021).
• 83% of workers say they would choose a flexible workspace over a traditional office for the environmental benefits (International WELL Building Institute, 2022).

With buildings accounting for 39% of global emissions, designing sustainable workplaces is essential (UN Environment Programme, 2022). Coworking spaces help property managers respond to climate change through efficient use of real estate.

How space management software helps

The catch for property management companies is that coworking requires specialized tools to manage. That's where space management software like Coworks comes in. Our solution provides all the features required to build successful in-house flexible office offerings.

For example, Highwoods Properties recently launched their own coworking space called The Commons in Raleigh, NC using our software to handle space booking, billing, member management, access control and more.

Overall, Coworks enables property managers to:

• Automate space booking and billing for desks, offices, and meeting rooms.
• Integrate access control and security systems for secure, managed entry.
• Optimize layouts and manage inventory as space needs shift.
• Offer modern conveniences like podcast studios, printers, ebikes, and more
• Gain data insights into utilization, tenant experience, and more to maximize revenue.

Coworks makes launching and operating shared workspaces much simpler, with month-to-month agreements, unlimited user support, a mobile member app, and integration with existing software tools.

The fact is, coworking spaces are not just smaller offices. They have unique operational needs that generic real estate management software is not designed to address. While traditional office leases may be 10+ years, coworking memberships change monthly. Shared workspaces require flexible billing, access control, and space usage tracking. Members expect a highly personalized experience with digital community features. And open layouts demand robust utilization analytics. 

Purpose-built space management platforms like Coworks provide the specialized functionality coworking spaces require. From automated billing to reporting of access and usage patterns, Coworks is engineered for the dynamic nature of flexible workspaces. The platform enables operators to deliver exceptional service and optimize data-driven decisions. For property managers launching coworking, space management software is essential to maximize ROI.

Watch a self-guided tour of the Coworks platform or talk to our team today.