Flexible Office Market Size, Share & COVID-19 Impact Analysis, By Type (On Demand, All Access, and Dedicated Spaces), By Industry (IT/ ITES, BFSI, and Retail & Consumer), By Application (Large Enterprises, SMEs, and Start-up/ Freelancers), and Regional Forecast, 2023-2030

The global flexible office market size was valued at USD 30.72 billion in 2022 and is projected to grow from USD 34.75 billion in 2023 to USD 96.77 billion by 2030, exhibiting a CAGR of 15.76% over the forecast period. North America dominated the flexible office market with a market share of 34.24% in 2022.

Hybrid work models allow employees to work both remotely and in office. As a result, businesses need convenient office solutions that can accommodate varying staff levels at any given time. In addition, as employees work from various locations, businesses may need office spaces in multiple geographic areas to cater to their staff’s needs. Flexible office spaces can be easily scaled up or down based on the number of employees coming into the office on any given day. For example, products offered by providers such as WeWork (dedicated desk, private office, office suite) meet the requirements of freelancers, SMEs (small and medium enterprises) & large enterprises. In addition, renting traditional office spaces can be costly, especially when they are underutilized due to remote work arrangements. Such offices allow businesses to pay for the space when they need it, making it a more cost-effective solution for many organizations.

Moreover, large enterprises can use such office spaces to adapt to changes in their business environment. They may be required to establish additional offices in different locations or dedicate specific workspaces for particular projects in response to the changing needs and requirements of their business. For instance, according to CBRE Group, Inc., an American commercial real estate (ACRE) service company, published that approximately 31% of large enterprises have been investing on flex to enter new markets. Globally, major companies have moved many of their employees to coworking office spaces, including Bank of America, Ernst & Young, Facebook, HSBC, IBM, Jaguar Land Rover, Microsoft, Salesforce, Shell Global, Starbucks, and UBS.

COVID-19 Impact

COVID-19 Prompted Corporates to Integrate New Means of Remote Work Arrangements Supplementing Market Growth

The COVID-19 pandemic significantly impacted the market, presenting challenges and opportunities. Many coworking office spaces were temporarily closed or operated at reduced capacity during lockdowns and social distancing measures, resulting in a decline in revenue for these office providers. Additionally, with the increase in remote work, some companies reduced their demand for office space, causing a temporary drop in occupancy rates. However, as remote work became more normalized, some businesses sought shared workspace solutions to provide their employees with occasional access to workspaces. The pandemic forced businesses to adopt remote work models to comply with lockdowns and social distancing measures. This necessity prompted flex office providers to enable clients to access their spaces remotely and seamlessly, facilitating remote work.

Moreover, the pandemic highlighted the importance of flexibility in office arrangements. Many businesses turned to flex office providers to avoid long-term leases and to adapt more easily to changing workforce needs. Some workers, unable to commute to city centers due to lockdowns and safety concerns, looked for regional or suburban flexible coworking space options closer to their homes. This trend persisted even after the pandemic.

LATEST TRENDS

Growing Preference for Adventure and Remote Work is the Major Trend     

According to ‘’The Global Live-Work-Shop Report’’ by CBRE, an increasing number of people place greater importance on the quality of their work environment. They focus on factors such as flexibility, space design, location, technology, services/amenities, and health & wellness activities. People are seeking adventure and remote work in comfortable conditions, which has led to the popularity of hotel-style coworking spaces such as Zoku and hotels such as Virgin that provide all required amenities in one building. Thus, hotel-style coworking space brands are on the rise. The conventional notion of recruitment tied to geographical constraints has shifted. Instead, hiring is determined by time zones required for particular roles, opening up a much greater talent pool for employers and presenting excellent job opportunities for employees globally. Fortune 500 companies including Facebook, Salesforce, UBS, IBM, Bank of America, among many others are paving the way to this trend and more businesses are willing to cover flexible office expenses for employees working remotely.

Another emerging trend is the ongoing transition of corporates to flexible spaces. According to JLL, physical office occupancy was high before the pandemic, but it has gone down, with average weekly attendance down by 50%, in 2022. On the other hand, coworking facilities have experienced a significant rise in occupancy when compared to traditional offices. Therefore, corporate companies with low occupancy rates, are avoiding extending expensive office leases and are switching to coworking and flex spaces, a trend expected to continue to rise in the near future. Additionally, the demand for technology-driven coworking space is growing constantly.  According to SuperOffice, 86% of buyers are willing to pay more for a great customer experience, making investments in this area a potential source for doubling e flex space income.

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DRIVING FACTORS

Growing Popularity of Small Business and Freelancers to Boost Market Growth

The growing popularity of small businesses and freelancers has significantly impacted the demand for coworking spaces. Small businesses and freelancers often face budget constraints, making these spaces a cost-effective solution that provides access to professional work environments without the overhead costs associated with traditional office leases. This cost savings is especially attractive to startups and individuals looking to manage their expenses efficiently.

Small businesses and freelancers frequently experience fluctuations in their workforce size and workspace needs. Flexible space providers offer scalable solutions, allowing clients to easily adjust their space requirements as their business expands or contracts. This adaptability reduces the risks associated with long term leases. Furthermore, these spaces often foster a collaborative and dynamic environment, providing small businesses and freelancers with networking opportunities, idea sharing, and potential collaborations with other professionals sharing the same workspace. These interactions can lead to new business opportunities and partnerships.

Expanding Commercial Real-estate Market to boost Product Demand

Commercial real estate development can lead to the creation of different office configurations, such as co-working spaces, serviced offices, and shared workspaces. These configurations align with the needs of businesses seeking flexible and adaptable workspace solutions. Hence, to remain competitive, commercial real estate developers often invest in creating modern and well-equipped office spaces. It includes amenities such as high-speed internet, meeting rooms, reception services, and shared facilities. These solution providers can leverage these amenities to attract businesses that value convenience and professionalism.

With the continued development and expansion of commercial real estate properties, there is an increased overall supply of office space in the market. According to the U.S. Census Bureau, building permits in the U.S. increased from 1,402 million in November 2022 to 1,541 million in August 2023. This expansion can lead to increased competition among landlords and property owners, resulting in more attractive lease terms for tenants, including those seeking coworking office solutions. The expansion of commercial real estate often includes the development of properties in various locations, including business districts, suburban areas, and emerging markets. This expansion offers businesses more choices in terms of location, allowing them to select areas that align with their strategic goals. Flex office space providers can tap into these locations to offer clients a wider array of options.

RESTRAINING FACTORS

Increased Risk of Theft or Misuse of Confidential Information due to Shared Co-working Space to Hinder Market Growth

The heightened risk of theft or misuse of confidential information due to shared co-working spaces can indeed impact the flexible office market growth of flexible office industry. Businesses, especially those dealing with sensitive information or proprietary data, may hesitate to use co-working spaces if they perceive a heightened risk of data breaches or theft. This concern can lead to decreased demand for these solutions among certain industries or companies with strict data security requirements. Moreover, industries such as finance, legal, healthcare, and technology deal with highly confidential information. The increased risk of data theft or misuse in shared co-working spaces may discourage businesses in these sectors from adopting such solutions. This can limit the growth potential of the flex office market, particularly in locations heavily populated by such industries.

Besides, co-working space providers rely on their reputation for professionalism and security. Therefore, high-profile security incidents can damage their reputation and, consequently, affect the entire flex space market. Furthermore, concerns about data security can lead to increased regulatory scrutiny, potentially resulting in stricter compliance requirements for co-working spaces. As data security becomes a more critical factor for businesses, co-working space providers will face increased competition to demonstrate their commitment to data protection. This, as a result, impedes the growth of the overall flex office market.

SEGMENTATION

By Type Analysis

Dedicated Spaces Type Segment Registered Dominant Market Share As They Offer Networking Advantages

By type, the market is divided into dedicated spaces, on demand, and all access. Dedicated spaces segment account for the majority of the flexible office market share, with 48.71% in terms of value. Dedicated workstations help employees reduce visual and acoustic distractions in co-working spaces, resulting in increased team productivity. Dedicated spaces provide the networking advantages of co-working office space while preserving the privacy of individual offices. The footprint of dedicated, flexible spaces is expanding due to technological advancements that are transforming how and where work is done. Flex office operators such as WeWork provide dedicated desks and private offices on a monthly or annual membership. They also provide personalization options for employees that contribute to the high demand for dedicated spaces by small and medium-sized businesses, freelancers, and startups.

On the other hand, all-access membership enables employees to access all flex office locations, including meeting rooms, co-working areas, phone booths, and lounges, empowering them with a flexible and productive work environment. Flex office operators, including IWG and WeWork, provide monthly, quarterly, and yearly co-working memberships to businesses of all sizes. The memberships allow businesses to access different workspaces worldwide. The major advantage of all-access coworking space offices is that they are fully- furnished with all amenities at one location, providing flexibility and convenience to employees. Co-working memberships also provide networking opportunities for employees and reduce the overhead costs of setting up a traditional office for businesses.

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By Industry Analysis

BFSI segment to Witness Highest Growth Rate due to Substantial Office Space Leases

Based on the industry, the market is segmented into IT/ITES, BFSI, retail & consumers, and others. The BFSI sector has huge potential and a robust resurgence, with major global and domestic firms such as JP Morgan, HDFC, Axis, and Morgan Stanley securing significant office space leases. Thus, the sector is expected to register highest growth rate from 2023-2030. For instance, in September 2023, according to Economic Times of India’s sources, include Northern Trust secured 4.7 lakh square feet in Bangalore, HDFC acquired 8 lakh square feet. A greater focus on returning to office, combined with improvements in the domestic financial sector, will further supplement healthy space uptake in the short to medium term, said Peush Jain, Managing Director, Office services, Colliers India.

Meanwhile, the IT/ITES segment accounted for the largest share of the market in 2022, in terms of revenue. The demand for coworking offices for the IT industry is strong in the U.S., Europe, and Asia Pacific region due to the rising number of IT companies in developed and developing countries. The fast-growing IT industry is a significant factor propelling market growth. Many small and medium IT companies looking to save money on real estate office rents opt for coworking offices globally. Various flex office space operators such as JLL, WeWork and IWG have invested in technological advancements, which are likely to contribute to the growing demand for co-working spaces on a global scale. The introduction of automated access cards, booking apps, attendance systems, and automated invoices is anticipated to further boost market growth.

By Application Analysis

Large Enterprise Application Segment to Grow at Fastest CAGR over the Forecast Period 

Based on the application, the market is segmented into large enterprises, SMEs (small and medium-sized businesses), and start-ups/freelancers. Large enterprise application is expected to exhibit a high CAGR over the forecast period. According to an article published by The Economic Times in 2022, the changing work dynamics due to COVID-19 are promoted large enterprises to create more suitable work environment that boosts employee engagement, thereby propelling the demand for flex offices globally. Large corporations that embrace flexible office spaces enjoy several advantages. These benefits include enhanced visibility and the promotion of innovative work methods, all while avoiding the substantial capital costs typically associated with traditional office spaces. The has made real estate industry a significant part of the operational decisions for flex offices in large enterprises such as IBM and Microsoft.

small and medium-sized businesses application segment, accounted for major share in the market as they offer numerous benefits including flexibility, increased networking, amenities, and the ability to move-in quickly, all of which are significant factor contributing to market growth. The pandemic created cash flow problems for many SMEs, leading to increased demand for flex space globally. Many pay-as-you-go and co-working spaces are designed to cater to freelancers and SMEs who prefer not to commit to long term and multi-year office lease. Moreover, as SMEs expand their business, they often find the need for bigger office spaces. Flex offices are growing at a significant rate as it offers office spaces of different sizes to cater to the demand of SMEs

REGIONAL INSIGHTS

Geographically, the market is divided into North America, South America Europe, the Asia Pacific, and the Middle East & Africa.

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Asia Pacific market is set to grow significantly due to government support and promotion of flexible workspaces, favoring market growth. For example, in Sydney, the South Wales government supported the establishment of a 17,000 square-meter tech hub in the city’s central business district, designated as a startup space, providing flexible working arrangements for startups. The government of Japan also promoted remote working by inaugurating Telework Day in the country and introducing various reforms to enhance productivity and work-life balance of individuals.

The increasing number of flexible office providers in Asian countries such as India, Japan, China, Singapore, and others due to the rise of the real estate industry post-pandemic, is boosting the market growth. The rising number of startups and freelancers in Asian countries is contributing to the increasing demand for the co-working industry. According to an article by the Times of India, the number of recognized start-ups in India grew from just 471 in 2016 to 72,993 in 2022, which boosted the market growth. Workspace providers are aiming to launch new workspaces in Asian countries to cater to the growing demand for product in the region. For Instance, in October 2021, Compass Offices, a U.S.-based real estate company, launched four new flex office spaces in Hong Kong to cater to the growing demand for co-working space in Asia. In addition, the burgeoning working population in Asian countries presents ample growth opportunities.

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The market in North America dominated the global market. The growing adoption of office arrangements in the U.S. is a crucial factor boosting market growth in the region. The market’s growth is driven by the changing working styles of the working population and the rise in the commercial real estate market post-pandemic. According to a report by the CBRE Group Inc., a United States based real estate company, the largest flexible market in the U.S. is in Manhattan, San Francisco, and Los Angeles. The increase in the need for work flexibility by employees in the United States and Canada, along with the growing number of coworking office spaces that provide different office spaces for co-working to hybrid models at affordable prices, contributed to the exceptional growth in the flex office market. According to a report by the Instant Group, a U.K.-based company, states such as New York, Texas, and California recorded the highest growth in the number of centers in the United States

A growing demand for move-in ready, amenity-rich flexible workspaces for remote working in European countries, including the U.K., Germany, France, and others has fueled the growth of the flex office market. The COVID-19 pandemic prompted a widespread shift toward work-from-home and hybrid working for employees, which further boosted the market growth. An increase in the number of flexible workspace locations across Europe is a crucial factor propelling the market growth in the region. For Instance, according to a report by The Instant Group, a London-based group, in May 2022, WeWork, a U.S.-based real estate company, announced that WeWork on Demand. The company’s pay-as-you-go service expanded its workspace across several European countries, including Belgium, France, Germany, Poland, Spain, Sweden, and the Netherlands. 

KEY INDUSTRY PLAYERS

Strategic Partnership with Companies to Uplift the Flexible Office Service Adoption to Promote Market Growth

The competition in the flexible space office market is growing. As the competition amongst coworking spaces increases, businesses are looking for ways to differentiate themselves from their competitors. Adding new services and amenities, such as health and wellness clubs, cafeterias, private offices, conference rooms, and event spaces, is helping operators attract new members and retain existing once.

The flex space sector is highly competitive, with aggressive pricing and large new corporate entrants seeking to make an early impression. As the market continues to grow exponentially, competition is heating up. For operators of all sizes, understanding the requirements of their tenants is paramount. Market players are adopting various organic as well as inorganic growth strategies to increase their market share. Partnerships are a major strategic approach undertaken by companies such as WeWork. For instance, in June 2021, WeWork announced San Francisco as its fourth city partnership to foster economic recovery, following New York City, Washington, D.C., and Miami. In August, 2021 the company launched partnership with Hudson’s Bay Company to power SaksWorks coworking offering. Furthermore, in the same month the company announced a USD 150 million strategic partnership with Cushman & Wakefield to deliver innovative flexible space operating platform.

LIST OF KEY COMPANIES PROFILED:

• IWG (Switzerland)


• WeWork Companies LLC (U.S.)


• Newmark (U.K.)


• Industrious (U.S.)


• Desana (Scotland)


• LiquidSpace (U.S.)


• Flex by JLL (U.S.)


• BHIVE Workspace (India)


• SmartWorks (India)


• ServCorp (Australia)


• Hubble (U.K.)

KEY INDUSTRY DEVELOPMENTS:

• January 2023: JLL announced that it had undertaken the property management operations and leasing efforts for Gaseteria Works, a boutique flex office and co-working office located in the U.S. This facility had opened earlier in January 2023.


• September 2023: SmartWorks announced the launch of a new flexible workspace in Chennai. The center was a 2 lakh square feet place, Olympia Pinnacle, which is close to Chennai’s IT corridor.


• August 2022: SmartWorks announced the addition of Vaishnavi Tech Park in Bengaluru, a 7 lakh square feet office space campus. This office expanded the company’s footprint and operations in the city. The office space offered various amenities, including a cafeteria, parking, and recreation facilities for different companies.


• February 2022: ServCorp launched a small business guide for flexible working. The company designed month-to-month affordable memberships for small businesses and virtual network opportunities for business growth.


• April 2021: Flex by JLL announced the opening of Orchard Workspace at MetroTech in Brooklyn, New York. It is a 50,000-square-foot flex office and offers flex space, co-working space, meeting rooms, and virtual offices for small, medium, and large-scale businesses.

REPORT COVERAGE

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The report provides a detailed analysis of the market and focuses on key aspects such as competitive landscape, services, and leading product types. Besides this, the report offers market insights and highlights key industry developments. In addition to the aforementioned factors, the market report encompasses several factors that have contributed to the growth of the market in recent years.

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