Rise of the Flexible Workspace Industry
A Dismantling of Traditional Workspace Models
The business world has been turned on its head over the past almost two years. Countless business processes have transformed as entrepreneurs and businesses adapt to the new business normal. Flexibility was already a critical business requirement, and it became even more important due to pandemic and its impact on businesses and professionals.
Optimizing capital expenditures related to real estate suddenly became a key focus for businesses. Initially, when the pandemic hit, work-from-home arrangements were seen to be temporary. But as the pandemic wore on and evolved into an endemic, many began to evaluate both their short- and long-term workspace plans. Businesses that were adamant about workers coming to a fixed workspace multiple times per week—and often every day of the week—changed their position after discovering the productivity and collaboration of their workforce actually increased.
Flexible Workspace Demand Is Exploding
Yet, going fully remote is not for most businesses. Hybrid workplace arrangements have been adopted by many businesses—where workers spend part of their time in a workspace and the rest of their time in remote work settings. A study in Harvard Business Review found that almost three-quarters of businesses plan to offer hybrid work models for their employees. There is a good reason for wanting to do so: In a recent study, Accenture revelated that 63% of high-growth companies use hybrid work arrangements, whereas 69% of companies with no growth or negative growth do not offer hybrid work options.
When it comes to working in a workspace, employees may do so from a fixed company workspace or virtual workspace such as day offices and coworking space from providers like Davinci Meeting Rooms. Remote work is typically associated with work from home, though it also can be in virtual workspace.
One of the outtakes is a dramatic growth rate for the flexible workspace industry—one that most believe will continue for some time. In the first half of this year, Cushman and Wakefield reported a 73% increase in demand for flexible workspaces. The accelerated growth in flexible workspace is expected to continue. Consider the following. Prior to the pandemic, around 4% of corporate offices were flexible workspaces. JLL predicts this number will reach 30% by 2030. Instant Offices puts the growth rate higher, with 35% of offices becoming flexible in some way by 2023.
Different Types of Flexible Workspace
When it comes to flexible workspace, there are multiple types:
Coworking space. These are open and shared environments where professionals—from entrepreneurs to corporate workers—work alongside each other. Many include lobby greeters and provide workers with billable administrative services. These flexible workspaces normally can be booked by the hour, day, week, or month and have rented meeting rooms that can be reserved for a fee.
Day offices. These are in shared offices but are dedicated, enclosed offices where individual professionals can work in private. Day offices can be booked by the hour, day, week, or month and also come with lobby greeters and administrative services.
Hybrid offices. These are a combination of coworking spaces and day offices—along with rented meeting rooms. Professionals can use coworking space when they do not require privacy, and they can use a day office when the situation demands greater security.
What Is Driving Flexible Workspace Demand
The flexible workspace industry was already experiencing rapid growth before the pandemic. There are a number of factors why businesses and entrepreneurs are choosing flexible workspace:
Lower cost. Traditional office leases do not make sense for many small businesses. Long-term leases lock them into agreements that fail to scale up and down with the business. The spaces are also expensive in terms of CapEx—not only in terms of the cost of the lease but legal fees for reviewing the lease, fitting out the office with desks and furniture, setting up and maintaining communications network, managing cleaning processes, greeting visitors, and more.
Recruiting and retaining top talent. A majority of workers want to remain remote or prefer a hybrid work model. Roughly 1 in 5 candidates are applying for out-of-state jobs. One in five millennial women won’t work for an employer that ban working from home. The reality is that businesses with flexible workspace can recruit and retain top talent better than those without flexible workspace options.
More startups. The number of businesses started during the past year—pre-pandemic versus during the pandemic—skyrocketed. According to the U.S. Chamber of Commerce, over 4.3 million new business applications were filed last year, a jump of 24% over the prior year. Many of these startups require office space, but not permanent office space that comes with long-term leases. This is where flexible workspace is a perfect fit.
More freelancers. Freelancers certainly took a hit as a result of the pandemic. 80% of freelancers say the pandemic has negatively impacted them, with more than 6 in 10 indicating they lost income. Thus, it isn’t a big surprise that the number of freelancers in 2020 declined 7%; and the number of full-time freelancers dipped at an even faster rate (11%). But predictions indicate the freelancer market will rebound. Certain niche professionals are in high demand such as those in skilled services (coaches, consultants, et al.) (19%), creative services (15%), and IT (13%). The number of professionals wanting to work for themselves is also on the upswing. While work from home is one option for freelancers, some rely on flexible workspace for all of their work and others do at least some of the time.
Vetting and Finding the Right Flexible Workspace
Workspace plays a critical role in the life of businesses and professionals. When a home office is not configured to promote productivity, a professional suffers and the business for which they work does as well. The same can be said of permanent workspaces in corporate offices and flexible workspace.
When it comes to flexible workspace, businesses and professionals need to assess their options to determine which flexible workspace best meets their needs. Virtual office solutions like Davinci Meeting Space give them the ability to find flexible workspace with the configurations and services that address their work and business requirements—from location, meeting room sizes, coworking space versus day offices, administrative support, lobby greeters, and more.