In its paper, 'Disruption or Distraction', the property services firm investigates the flexible office space sector and both the challenges and opportunities it presents for companies, real estate investors and developers.

Among key findings are:
•   Over 7 million m2 of stock is to be added in Europe by 2023, pushing the total market size to 10 million m2
•   The market share in Europe’s central business districts is likely to exceed 15% in the next five years

The prediction comes off the back of phenomenal growth that has seen the flexible office workspace sector more than double in size since 2014.

Multiple reasons lie behind the expansion, including evolutionary changes in how, when and where people work, shifts in lifestyle, and rapid advances in technology.

The mushrooming flex office market is a global trend and not restricted to Europe, JLL reports. Globally, the amount of flex space in the 20 largest flexible office markets grew by 30% in 2017 – equivalent to around 1 million m2.

The property services agent believes flexible office space will account for 30% of some corporate portfolios by 2030. It splits occupiers into three types. The first is the ‘conservative’ user, exhibited by having a low percentage of flex space in their current portfolios and possessing zero or limited expansion plans. The second is dubbed the ‘experimental’ user which has a low-to-moderate percentage of flex space in existing portfolios but will have up to 10% and beyond of its occupational portfolio in flex offices in the next 3-5 years. The third group is referred to as ‘visionary.’ These occupiers use a significant amount of flex space already and possess clear and ambitious plans for widespread adoption, reaching upwards of 20% of portfolios.

JLL’s report also states that barriers to flex space adoption include concerns around brand dilution, cost, security and confidentiality. But similar risks are associated with non-adoption, around staff retention and attraction, as well as being perceived as stale.

With over 700 flex space providers in the industry, consolidation is inevitable, and a downturn would accelerate this process, adds JLL. ‘The well-capitalised and experienced providers with geographical diversification will flourish, as well as innovative and niche operators providing a next-generation offer,’ concludes the report.

NEW CONCEPTS

Some landlords and developers will consider establishing their own flex space concepts, collaborating with existing providers, and looking at M&A. Landlord-initiated concepts are burgeoning in cities such as Amsterdam - where they account for 25% of all flex space - London and Paris.

Dan Brown, head of flex space, EMEA, JLL, commented: ‘The rise of flex space is resulting in one of the biggest shifts across the real estate industry that we’ve ever seen. The consumerisation of real estate, which we’ve already witnessed in hospitality and retail, is reshaping business models and investment strategies alike. Our research shows how different markets and different companies are moving at varying speeds, and as the dramatic growth shows no signs of slowing, companies, investors and developers must keep on top of the evolution to understand what this means for their specific business ambitions.’

Alex Colpaert, head of offices research for EMEA, added: ‘For investors, flex space offers new opportunities for those who embrace innovation and change, but with no one-size-fits-all approach, it’s not without its challenges. What is clear, though, is that it’s here to stay and is having a real impact on Europe’s office investment environment.’