From Fixed to Flexible: A Landlord’s Guide to Adapting Office Space

The flex space market is redefining the office landscape, proving that adaptability is the greatest flex in commercial real estate. Once viewed as a high-risk move, flexible office spaces are now in high demand, welcomed by occupiers seeking work environments that evolve with their needs, making flex space the future of office leasing.

But, how do you transition from a traditional office landlord to successfully operating within the flex space model? This guide takes you through all the key aspects.

Why consider flex?

The decision to flex is not only a response to market demand, led by occupiers shifting to attract and retain top talent in a competitive labour market, but also an opportunity to future-proof your portfolio.

For traditional office landlords, repositioning to flex space offers opportunities to:

●      Diversify portfolios: Flex space appeals to a wider tenant base across remote workers, startups, and large corporations seeking shorter-term flexibility. A diverse tenant base ensures steadier income streams, even during economic downturns or shifts in occupier demand.

●      Maximise occupancy rates: According to The Instant Group, occupancy rates for UK flex space increased 82% in Q3 2024, up from 80% in Q2.

●      Revenue generation: Diversifying membership types, spaces, and amenities can maximise profit across different income streams.

Take-up for UK flex office space is now at its highest level since 2019, reaching 839,000 sq ft at the end of Q3 2024, according to Workthere by Savills. London alone currently offers 12.5 million sq ft of flex space.

Flex models

Flex space comes in various forms, each designed to meet specific tenant needs. The main flex models include:

●      Coworking spaces: A shared workspace environment made up of people working for different companies. The coworking model typically operates across hot desking, dedicated desk, and private office membership plans at varying price points.

●      Serviced offices: A space or building with fully equipped private offices leased out to multiple businesses. Although serviced offices may include coworking-style breakout space, they don’t offer ad-hoc memberships, instead prioritising fixed memberships or rolling contracts. 

●      Managed offices: An entire office space managed by a third-party provider, leased to a whole company. Over the past five years, demand for landlord-delivered CAT A+ and managed office space has grown rapidly, particularly in London, according to our latest Breaking into Flex report.

Brandlords, management agreements, and the leased model

Along with the evolution of flex models, there are now various ways landlords can enter the flex space market. One example is the owner-operator model, where landlords take on an active role in managing and operating their buildings, rather than just leasing them out. In this model, the landlord takes full control of design, sales, customer service, and day-to-day management internally. This model can offer landlords higher returns, stronger tenant relationships, and full control over brand, pricing, and adaptability. However, it also introduces operational complexity, higher risk, and significant upfront investment, demanding both expertise and a steep learning curve.

As Becky Gardiner, Head of Storey at British Land 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. Financially, running flex in-house also gives us a direct revenue stream, and the initial investment was relatively modest—just a small number of additional team members. The return has been significant and really validates the strategic value of keeping control of our flex offer.”

Some of the UK’s most notable landlords lead the transition, such as: British Land, Landsec, and Commercial Estates Group (CEG), who manage large portfolios of commercial real estate. For instance, Landsec manages its flex space offering under its distinct MYO brand – a high-quality, tailored workspace experience. MYO Piccadilly achieved an impressive 65% occupancy within three months of its launch in September 2024. This year, MYO is expanding its flex space footprint to over 300,000 sq ft, with its largest site in Kings Cross (spanning 80,000 sq ft) due to open later this year.

An alternative route for landlords entering the flex space market involves forming partnerships with operators under management agreements. Unlike traditional leases with fixed monthly payments, management agreements are a revenue-sharing model that soften financial risks while providing landlords with a steady income stream. The landlord retains ownership and funds the fit-out, while the operator manages the day-to-day. Before the pandemic, just  9% of UK transactions were made under management agreements. However, this figure surged to 41% of deals made last year, exemplifying the significance of management agreements within the flex market.

Management agreements are viewed favourably for providing landlords with more influence over brand and service delivery. Partnering with established flex operators can be a major advantage, leveraging brand recognition and operational expertise.While the UK is ahead of the curve, Germany is still typically wedded to longer-term leases. However, flex space brand InfinitSpace recently opened a 4,500 sqm workspace in Berlin under a management agreement, indicating that times are slowly but surely changing.

A leased model is where a landlord signs a long-term lease with a third-party flex operator who takes full responsibility for the day-to-day running of the workspace, from fit-out to technology, sales, and customer service. Notable flex brands Spaces and FORA both operate under a leased model. Landlords who lease out their spaces benefit from a fixed stable income, regardless of occupancy fluctuations. On the other hand, landlords have little say over the brand, service quality, or tenant experience. The long lease terms also restrict a landlord’s ability to repurpose the space based on changing market demand.

Flex space fit-out

Designing for coworking is not simply about aesthetics. It involves creating spaces that reflect evolving workplace behaviours, foster community, and enable constant adaptability. Where traditional offices serve one long-term tenant with fixed needs, coworking spaces are agile ecosystems that accommodate a revolving door of users with diverse expectations. Some of the expectations from today’s occupants include:

●      Flexible layouts: Workthere recommends provisioning a mix of office sizes and space options, from coworking to small service offices and large enterprise spaces. Alongside fitting out offices and workspaces with ergonomic chairs and desks, breakout spaces have become the norm, complete with comfortable soft furnishings.

●      Amenities: Catering to the needs of hybrid workers, essentials like phone booths and meeting rooms have become standard amenities in workspaces. Distinctive amenities, such as podcast studios, saunas, breastfeeding rooms, and nurseries, bring a competitive edge and have experienced a recent surge.

●      Fitness and wellness facilities: From gyms to yoga studios, rooftop gardens to spas, today’s workplaces are designed to support every aspect of an employee’s day, seamlessly integrating work, wellness, and leisure for those commuting to the office. For instance, MYO Kings Cross will include wellness rooms and a members-only gym, while FORA Clerkenwell and Soho have enviable rooftops.

●      End of trip facilities:  With many workers walking and cycling to work, it’s now expected that flex space includes shower facilities, bike storage, and lockers.

●      Multi-sensory design: how will the space sound, feel, smell (and even taste)? User experience is paramount, so taking into account the way people move through the space is critical; is the post room near enough the front desk, or will getting post be a constant chore?

As new amenities and design features emerge, the hospitality influence on workspace design becomes increasingly clear, blurring the lines between high-end members’ clubs. Now, a workplace is for more than just work, incorporating social and leisure.

Meanwhile, recruiting staff cannot be simply copied and pasted from the traditional office model. For example, British Land’s flex space brand, Storey, hires hospitality experts, placing welcoming and personable individuals in community managers roles, providing impeccable customer service.

Technology powering flex space

Whichever flex model or lease agreement route you take, it all starts with the right technology stack. Relying on manual processes in your day-to-day operations create disjointed processes that frustrate members, create friction, and impact your bottom line. But, an efficient tech stack does it all – automating operations with ease, across payments, WiFi, communication, sales and marketing, access control.

Your tech stack involves many moving parts, from selecting the right tools for your space and installing hardware to leveraging data and reporting for informed business decisions. While today’s technology requirements can be complex, they are far from impossible to navigate, and partnering with an experienced flex space technology expert can make all the difference.

While your tech stack automates processes, you can run a leaner team focused on enhancing tenant engagement. The key considerations across your tech tools include:

●      Connectivity software: As more corporations move into flex space, the expectation for high-speed connectivity is crucial, along with the need for network and data security.  In 2023, the average fibre bandwidth ordered to sites increased by 80%, and 10Gb/s fibre lines currently make up 25% of all lines ordered, reflecting a broader trend that sees flex operators future-proofing connectivity.

●      Workplace management software: A single system centralises license and contract administration, automates billing, manages client requests, and simplifies meeting room bookings. This unified approach coordinates multiple teams and reduces manual tasks. For example, Pure Offices leveraged twiinworkspace to slash their monthly billing administration from an entire day to less than 30 minutes for 1,200 clients, demonstrating the significant impact the right system can have on managing a growing portfolio.

●      CRM: From first inquiry to contract signing, an integrated CRM centralises all communications across your pipeline, helping you track every interaction and ensure no opportunities slip through the cracks. Some workplace management platforms, such as twiinworkspace, incorporate CRM tools to create a smooth journey from lead to signed contract and beyond.

●      Accounting Software: Whether you’re reconciling invoices, tracking expenses, or preparing reports for stakeholders, the right finance tools reduce errors and save hours of admin time. For flex operators, integration is key – connect with your workplace management software for seamless billing and reporting to improve cash flow.

●      Access Control: Unlocking a convenient member experience, a succinct access control solution provides full visibility and control over who’s coming and going, and when. Integration with your workspace management platform enables instant member onboarding, remote management, and access rights adjustments in real time without keys or keycards.

Embracing flexibility

With flex space transforming office leasing, landlords have more opportunities than ever to adapt and thrive, with various flex models, leasing agreements, and technology solutions available at your fingertips. To position yourself at the forefront of this market, consider the steps you need to transition from fixed to flexible in our latest report: Breaking into Flex.