Flex Office Providers Optimistic: Savills

Although concerns over the short term remain, 76 percent of respondents to the firm’s survey showed confidence in the sector for the next 12 months.
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Though members of Workthere, Savills’ flexible office advisory service, continue to indicate some uncertainty about the market in the shorter term, the firm’s fourth Global Flexible Office Sentiment Survey found increased optimism regarding the next 12 months.

READ ALSO: Flex Office Sector’s Evolution Amid COVID-19

Forty-two percent of Workthere members were optimistic about the sector for the next three months, representing only a small increase from 40 percent in the July survey. The long-term outlook, however, was significantly more positive, with 76 percent of respondents reporting optimism toward the flex market over the next 12 months.

In North America, the likely drivers of that optimism, according to the survey, are decreases in the percentage of members seeking rent relief (down to 29 percent from 39 percent in July) and the percentage of members not renewing contracts (21 percent, down from 28 percent in July).

Workthere members seeking rent relief dropped to 22 percent, from 27 percent in the previous survey. 

Ted Skirbunt, National Director, Workthere Americas
Ted Skirbunt, National Director, Workthere Americas. Image courtesy of Workthere

Through this pandemic period, market participants are behaving rationally in the face of uncertainty, said Ted Skirbunt, national director at Workthere Americas, in a prepared statement. “Many small to midsized tenants are not renewing traditional leases upon expiration, seeking more flexible solutions, and there are more opportunities out there to secure flexible space at deep discounts to even just a few months ago,” he added.

Cal Lee, the global head of Workthere, indicated in the same statement that despite a dip in contract occupancy expectations, actual building occupancy and inquiry levels are moving in the right direction. 

A sector much in motion

Workthere was launched by Savills in February 2017 as its brokerage service and website listing platform—completely free for occupiers—for flexible, coworking and serviced office space across Europe, North America and Asia. Workthere also covers more specialized space, such as laboratories.

The survey consisted of 131 responses from flex office providers across the globe including Canada, the Czech Republic, France, Germany, Ireland, Spain, the Netherlands, the U.K., the U.S. and Vietnam. Data was collected via an online survey in early October.

In one sign of the coworking sector’s turmoil, in October WeWork closed three Washington, D.C., locations, though the move still leaves the coworking giant with 16 locations in the Washington metro. Further, the company noted that the downsizing resulted not from the pandemic, but from a strategic plan adopted late last year, after plans for an IPO were postponed.

In July, Ucommune Group Holdings Ltd., one of China’s largest providers and managers of coworking space, agreed to merge with New York–based Orisun Acquisition Corp., a special acquisition company. As of late last year, Ucommune’s portfolio comprised 211 locations and about 7.4 million square feet in China and Singapore.

Read the full report by Workthere/Savills.