Flex Appeal: Why landlords are embracing coworking

Over the last five years, the workplace landscape has shifted. Once a niche offering, coworking has accelerated in popularity thanks to its flexibility, shorter-term contracts, differences in workspace design, and sense of community over the rigidity of traditional office leasing. It’s now here to stay, with JLL forecasting that 30% of UK office space will be flexible by 2030. Let’s explore why office landlords are embracing the coworking movement.

Survival instincts

When corporations changed employee contracts, favouring hybrid working practices to attract and retain talent in a competitive labour market, they also moved away from occupying big office spaces. Instead of letting their offices sit empty, landlords have embraced flex, accounting for almost a third of companies in Q2 2024.

Viewed as a lifeline for landlords facing lower building occupancies, coworking can fill occupancy voids in larger spaces before a longer-term tenant moves in, giving breathing space to find a right-fit tenant rather than impulsively accepting a lower deal. As it involves leasing desks, spaces, and amenities in an open-plan workspace to different businesses or individuals, coworking is a viable option for buildings that don’t suit a traditional office layout.

For instance, turning 11% of GPE’s office portfolio into flex space didn’t require many drastic changes, as 75% of its floors were sub-10,000 sq ft. Within a month, GPE successfully leased out its flex space, securing an average lease length of three years, far quicker than experienced in traditional leasing. GPE now plans to expand its flex space portfolio, appraising an additional 152,200 sq ft of office space.

Meeting needs for today’s workers

While landlords favourably view the coworking model, it also has massive benefits for tenants. Hybrid working increases the demand for regional flex space in the UK, after many workers moved away from the capital to save on living costs during the pandemic. Today’s workers welcome the autonomy over deciding how, when, and where they work.

Manchester is leading the trend with its city centre reaching a 78% occupancy rate in Q1 2024, while the outskirts reached 75%. Likewise, at the end of Q3 2024, six regional markets acquired 252,000 sq ft (a 150% increase compared to Q3 2023).

Local coworking spaces are viewed as a perfect option to bridge the gap between the isolating experience of working from home as well as the costly and time-consuming commute. The core benefit of coworking lies in the essence of ‘co’: community, collaboration, and connection. Instead of one company occupying a large office space, coworking brings a vibrant mix of businesses and people together – a huge attractor.

Supporting start-up growth journeys

Coworking has long been synonymous with startups. More recently, landlords have identified opportunities to evolve the coworking model to support fledgling businesses during their growth journeys. For example, British fintech company Revolut first launched out of L39, a technology incubator hub and coworking accelerator for the capital’s most exciting startups owned by the Canary Wharf Group, in 2015. It then took a larger space in Westferry before expanding its office footprint by 40% in May 2025, signing a ten-year lease in May 2025 at the YY building – a 113,000 sq ft headquarters in the heart of the district.

1. Similarly, flexible workspace plays a key role in Legal & General’s real estate strategy. In larger buildings, flex is typically introduced not as a standalone product but as a value-added amenity. A portion of the building is then taken up by either L&G’s own coworking joint venture – Foundry UK – or operators like Runway East and Work.Life, working in partnership with L&G, offering customers the ability to scale up or down without leaving the asset.

Andrew Mercer, Office Sector Lead at L&G, explains: “The ideal model is a building that grows with its tenants. A company might start in a coworking or managed space, move into a fitted unit as it scales, and eventually take Cat A space they can undertake a bespoke fit-out themselves. That journey drives loyalty and lets our investors benefit from greater retention and monetisation in multiple ways across a customer’s lifecycle.”

Combining short and long-term leases, this hybrid approach to service-based space creates a diverse income stream, blending predictable returns with agile, operational income. That mix not only increases the asset’s capital value but also broadens its appeal to a wider pool of investors.

British Land launched its flex space brand, Storey, in 2017, after identifying a gap in the market between the coworking model and traditional leases. Becky Gardiner, Head of Storey, explains:

“From the outset, 7 years ago, we made a strategic decision to develop and manage Storey in-house rather than partner with a third-party operator. We already had the core capabilities—leasing, operations, design, customer engagement—so we asked ourselves: why share the profits? One of the biggest advantages is having a direct relationship with our occupiers. When an operator sits between us, we lose visibility. With Storey, we own that conversation. If a customer wants to grow, we can support them across our broader portfolio—whether that’s in Storey, Work Ready or traditional space.”

The owner-operator advantage

Diversifying a property portfolio with coworking protects it against future economic shocks, as landlords can monetise through multiple revenue streams. The Instant Group found that flex operations could generate generous returns of up to 30% compared to net effective rent. This is significant compared to the losses sustained from vacant spaces within a portfolio.

In some cases, asset managers have created their own in-house flex brands to leverage existing in-house expertise, an example being CEG’s in-house brand, Let Ready, as it felt that a partnership wouldn’t align with its long-term asset strategy, nor give them the control they were looking for. Utilising its experience working with operators, CEG iterated the product design, pricing assets more responsively, preserving the local character of each building. With a portfolio spanning the UK, CEG found occupiers were more drawn to location-specific identities than a homogenous national brand, something a standardised third-party model couldn’t offer.

In large buildings, Let Ready also functions as a feeder, capturing early-stage occupiers and helping to scale within the same property, supporting tenant retention. This model also appeals to established organisations seeking short-term or project-based space. Corporate organisations have used Let Ready for temporary needs, later transitioning into longer-term conventional leases within the same building.

Similarly, GPE’s full control over assets ensures consistency and quality across its portfolio. Nicola Jones, Customer Experience General Manager, adds: “Unlike providers that lease space desk by desk, we manage everything, from the building environment to the service. This control allows us to integrate flex smoothly into our wider portfolio. It also removes any ambiguity for our customers – there’s no passing the buck or delays in action. We’re the single point of accountability, which gives our customers greater confidence and peace of mind. This also means we can deliver a more cohesive experience and consistently high standards across the entire building”.

Technology needs

Whether coworking exists as a stand-alone product or within a property portfolio, integrating technology tools not only streamline processes but also help operators generate more revenue through different income streams. For instance:

• Monetising amenities: Coworking monetises across multiple products, from hot desks (that enable more customers than desks), bookable meeting rooms, virtual offices, wellness classes and facilities, and even food and beverage add-ons. A coworking tech stack can aid revenue generation and customer experience.
• A dynamic pricing tool: By gathering data on space usage and customer behaviours, a built-in dynamic pricing tool can help increase costs on amenities at peak times, boosting profit.
• Upgrades to WiFi and connectivity: Investing in premium WiFi and connectivity increases costs, such as charging a premium on bandwidth upgrades to access uninterrupted high-speed connectivity.

Having a strong internal system at Landsec helps to deliver a frictionless customer experience across all its product, including its branded coworking offering – MYO. Natasha Morris, Director of Flex Offices and Head of MYO, explains:

“The goal is a frictionless experience for the customer and technology plays a huge part in that. Whether that is transitioning through the spaces, or visiting other sites, using the plug and play meeting room and events spaces or communicating with the individual customers in the MYO…We don’t want technology to remove our interactions with our customers, we want technology to unlock and enhance them.”

Some landlords build their own workspace management software, but they can face complexities when tools aren’t centralised on one platform. Partnering or outsourcing their technology needs to a trusted consultancy ensures that all the technology elements are taken care of, ensuring the smooth running of the space with wrap-around support provided.

The future of coworking

Coworking aligns with occupiers’ changing expectations of the workplace – valuing inspiring, flexible, and community-focussed spaces. By embracing coworking, landlords meet occupier needs while protecting their portfolios against future economic shocks, setting a new standard for the future of the workplace.

Download our latest Breaking into Flex report to learn more about how to embrace the coworking model.