As office vacancies remain a key factor in investment decisions, flexible workspace solutions offer landlords a lucrative alternative to fill underutilized spaces to generate rent premiums and boost NOI.
With office vacancies at the core of investment (or sell-off) decisions, landlords must evaluate all options. Global office utilization is still struggling to return to pre-pandemic levels, but even before the pandemic, occupancy rates rarely exceeded 70%. According to our latest research, flexible workspace operators have reported occupancy levels at around 80%. The prospect of flexible workspace poses a hopeful alternative for landlords and owners to fill office voids.
The investment case for flex is strong
Not only are occupiers seeking flexible workspace solutions, but they are also seeking product diversity. Typically, flex solutions encompass a wide range of products based on usage type and time. Overall utilization across flexible workspaces has increased, with demand for short-stay flex products like meeting rooms, private offices, and event spaces also ticking up.
For a landlord or building owner, offering flexible space DIY is no easy feat – there are many market variables and even more operational factors to consider. But for those who are successfully operating a flex proposition, this model could generate a premium return of up to 30% compared to net effective rent. That’s pretty powerful when compared to losses sustained from maintaining vacant spaces across a portfolio.
Fast-track to flex
Flex doesn’t have to be DIY. There are various forms of partnerships to consider – from a branded operator to a white-labeled solution across multiple buildings. Finding the right operator partner to fill voids can be a quick win for landlords seeking to monetize vacant space sooner rather than later. Easier said than done? Not necessarily.
Procuring a flex operator partner
At The Instant Group, we work with over 26,000 flex operators and have 20+ years of market expertise to help landlords find operator partners best suited to their strategy and assets. Whether landlords prefer a traditional lease or a management agreement, we connect them with the right operators by conducting both qualitative and quantitative analysis to identify the best fit for their property.
Our process evaluates operator bids against real market data to project how an asset would trade as a flexible operation. That means de-risking the investment with validated data and the confidence of a thoroughly-vetted partner.
Whether you're looking to appoint a new flex operator, replace an existing one, or fill a vacant space, our team of flex experts manages it all. We handle everything from conducting a thorough database search and analyzing bids to providing strategic partner recommendations.
Learn more about the procurement process here.
The benefits of partnering with an operator
- Premium rents: Landlords offering flexible, service-focused workspaces can achieve higher rental rates than traditional leases thanks to the added amenities and services.
- Product diversification: Incorporating flexible workspaces into a property development diversifies the offering and increases the asset's value.
- Accelerated occupancy: Adding flex space helps reduce vacancy periods and boosts occupancy compared to waiting for a traditional lease. It also offers temporary swing space for existing tenants when needed.
- Improve tenant satisfaction: Flexible workspace operators drive tenant engagement with activities like events and networking gatherings, which can lead toa stronger sense of community within the building.
- Premium return: When weighing risk versus reward, partnering with an operator can offer up to a 30% premium over net effective rent.
- Revitalization: Enhance underperforming assets by introducing dynamic flex space, broadening your tenant base, and increasing both stability and long-term growth.
Want to find an operating partner? Discover how The Instant Group can help you fill voids faster and make smart investment decisions with Operator Procurement.
Contact us at [email protected] or learn more about our Operator Procurement offering to get started.
