Flexible Office Market

Global Flexible Office Market Forecast

• The market for flexible offices that recorded revenue worth US$44 Bn will possibly reach US$130 Bn by the end of 2030
• Market valuation poised to expand at a CAGR of 17% between 2023 and 2030

Quick Report Digest

1. The market is showcasing increased demand for flexible offices due to the new trend of working in a distinctive flexible office, a workspace environment that promotes work-life balance and enhances restrictions on standard working hours. Such an option is known to inspire and boost productivity, supporting the expansion of the business.
2. Other factors influencing this market are cost reduction, unpredictable property costs, an uncertain economic climate, and shifting employment patterns.
3. Data security is an uncertain factor faced by flexible offices due to no safeguards in place to ensure it. In addition to poor data security, excessive operating expenses reduce profit margins.
4. In 2022, the co-working spaces dominated the industry. The segment's expansion is related to investigating vertical integration opportunities and establishing alliances in co-working spaces.
5. In terms of market share for flexible offices globally, the retail segment is anticipated to dominate. The persistence of retail characteristics that focus on providing a service is credited with the segment's expansion. Additionally, in addition to short-term financial flows, retail service providers and retail operators have long-term liabilities.
6. In 2022, the big brand category controlled the market. Large corporations, like the Jaguar Land Rover team at the Tata Company, worked with We Work to adopt flexible coworking space to boost their corporate productivity.
7. The North American region is anticipated to account for the largest global flexible office market share due to the quick acceptance of flexible work arrangements by numerous businesses nationwide.
8. The market for flexible offices is significantly expanding in the Asia-Pacific region owing to the rising number of freelancers and small enterprises in the region demanding such type of temporary workspaces to complete their professions.

A Look Back and a Look Forward - Comparative Analysis

The flexible office is now a reality thanks to an expanding number of enterprises worldwide and the rise of co-working spaces. A completely furnished office space with facilities is referred to as a flexible office and is made available to small to large organisations and businesses through flexible leasing periods. The market is blooming due to factors such as the consistent transition from traditional offices to flexible offices, expanding demand for remote workplaces, rising availability of open-floor office spaces, and rising acceptance of flexible offices by small and medium-sized businesses.

The market witnessed staggered growth during the historical period 2018 - 2022. The global flexible office market is demonstrating expansion due to increasing usage and popularity by various advertising and media agencies, technology firms and startups, which were the main factors responsible for enhancing this flexible office market. Cost reduction, variable property expenses, a volatile economic climate, and evolving job patterns are all factors influencing market growth.

A number of small businesses and startups looking for temporary office space, the government's increasingly supportive policies encouraging new businesses, increased focus of market players on providing more services at reasonable rates are a few more factors anticipated to support market growth in the future.

Key Growth Determinants

• Rise in Number of Start-ups and SMEs

During the projected period, the expanding tendency to establish small- and medium-sized businesses and establish startup businesses in important cities would significantly contribute to the overall market increase.

In addition, startups in developing and developed areas now require a flexible office, which will drive demand for flexible offices over the projection period.

Moreover, a sizable portion of the demand for flexible offices from large multinational organisations is anticipated to impact the market's growth throughout the projected period significantly. It appears that corporate businesses are looking for flexible spaces and are, therefore, attempting to rent out flexible spaces.

• Popularity of De-centralised Centres

Since employees living in the suburbs seek to save on commute expenses and time, the focus is shifting away from major business districts and suburban cities.

The future of the flexible office market is anticipated to be heavily influenced by travel times, forcing service providers to consider decentralised sites as an alternative.

Considering the challenging macroeconomic conditions, particularly in Europe and the US, Mark Dixon, the founder and CEO of International Workplace Group (IWG), forecasts a swift transition to new suburban locations to fulfil rising demand and cut costs.

• Evolving Corporate Landscape, Coupled with Emphasis on Minimising Overhead Costs

Flexible offices have significantly increased in popularity over the past ten years due to the changing corporate landscape. Additionally, the need for flexible offices has increased significantly in recent years due to the remote working trend, which is another reason that is anticipated to propel the global flexible office market during the forecast period.

Furthermore, the prospect of working from a flexible office has become a reality as high-speed Internet access spreads across big centers in developed and emerging nations. The rise in open floor plan office spaces and the influx of several co-working places have significantly influenced the overall expansion of the worldwide flexible office market.

To obtain an advantage in the current market environment, market players operating in the flexible office industry are increasingly concentrating on striking a balance between rising real estate prices and growing technological influence.

Major Growth Barriers

• Highly Competitive Industry

The introduction of multiple companies has increased competition in the market for flexible offices. Due to this saturation, it may be difficult for individual suppliers to stand out from the competition and draw tenants.

Offering distinctive value propositions, such as specialised industry-focused facilities, cutting-edge amenities, or specialised services, is necessary to stand out among the competition.

It takes strategic planning, ongoing innovation, and a thorough understanding of market dynamics to meet these difficulties. Providers who can successfully overcome these challenges will have a better chance of dominating a market and satisfying the changing needs of professionals and enterprises.

• Lack of Data Security

The necessity for a data-centric security solution to safeguard the datasets has arisen due to the increasing volume of data being kept and used for routine operations across numerous locations of enterprises.

Employees with access to the company's databases and systems may give other employees access to sensitive data. This threat potential increases by implementing a hybrid environment across organisations where workers can work remotely or in the cloud.

As a result, direct data protection is required to create more obstacles that prevent unauthorised data distribution.

Key Trends and Opportunities to Look at

1. Rising Trend of Freelancing

Many professionals work for multiple organisations rather than just one and are not employed by any one of them. They need a flexible office as a result to serve a certain organisation.

More than 1.5 billion people throughout the world work as independent contractors, according to a new analysis.

2. Surge in Number of Collaborations and Community

Flexible office for encouraging teamwork and community building in a shared workspace. These frequently facilitate professional networking opportunities, neighbourhood gatherings, and sector-specific initiatives that unite individuals from varied backgrounds.

People feel drowsy in their familiar surroundings and have lost interest in the traditional corporate culture at their place of employment.

3. Growing Awareness

Over the past ten years, the commercial real estate market has significantly changed as flexible offices and co-working spaces have gained global appeal. The global market for flexible offices is expanding due to the rising awareness of these spaces.

The introduction of flexible offices has continued to change the corporate environment, which is projected to continue during the evaluation period.

How Does the Regulatory Scenario Shape this Industry?

By implementing modifications to the current structure, government policy may ensure that the broader societal benefits of flexible working are maximised. To boost the availability and uptake of flexible working, the proposed changes to the Right to Request Flexible Working legislation aim to promote conversation between employer and employee on balancing work requirements and an individual's needs.

The UK government initially made it possible for parents and some other caretakers to request flexible working schedules in April 2003. The right included asking for a change in the place of employment, the amount of hours worked, and the corresponding work schedule. In 2014, all employees with 26 weeks of continuous employment were granted that right. Similarly, a new decision by the Fair Work Commission (FWC) Australia on December 1 stated that employees could request flexible work (about the hours, location, and/or pattern of their work), and employers must sincerely try to agree on the same.

Fairfield’s Ranking Board

Top Segments

1. The Coworking Space Category Continues to Dominate

The coworking space segment dominated the market in 2022. Due to the growing popularity of this working style among most businesses, the coworking space industry has become the largest. In contrast to the conventional practice of offices, many businesses worldwide are leasing coworking facilities.

Furthermore, the virtual offices category is projected to experience the fastest market growth. With the increased internet usage and digitisation, people have been encouraged to save time and money by developing virtual platforms that assist in carrying out business operations without owning a physical location for work. This trend of virtual offices has grown.

2. Retail Sector Surges Ahead

In 2022, the retail sector dominated the industry. The segment's growth is attributed to the continuance of retail features that emphasise on providing a service. Retail service providers and retail operators also have long-term liabilities in addition to short-term cash flows. Users can choose from a variety of spaces that both retail operators and service providers provide. Segment growth will result during the predicted period.

The IT and communication sector is anticipated to grow substantially throughout the projected period. Due to the quick uptake of coworking patterns, the IT and communication sector has become a very successful market in terms of flexible office patterns. The IT sector is well supplied with devices and the internet, which makes it very simple for them to do business through the devices and allows them to embrace the flexible office model quickly.

3. Big Brands Lead

The big brand segment dominated the market in 2022. Due to the enormous demand for flexible office spaces among them, the big brand segment has emerged as the largest segment. Due to the growing trend of hybrid workspaces, it is anticipated that the sector of major brands will continue to hold its position in the future. The independent brands category is expected to experience the fastest growth within the forecast time frame.

Independent brands typically own the main hub, which aids in monitoring the entire system and operation of the business. This sector of independent brands is also anticipated to make a sizable contribution to the flexible office market due to the leading market participants' rapid adoption of flexible work schedules to draw in prospective employees worldwide.

Regional Outlook

North America

In the flexible office industries, flexible office adoption is anticipated to dominate in the North American region. This is because flexible coworking spaces have been built in many locations around this region, along with the quick uptake seen in office spaces.

Additionally, the enormous quantity of disposable income readily available to individuals enables them to establish numerous work zones that will aid in maintaining the sector's operations and, as a result, significantly raise the company's profit margin.

Co-working has rapidly taken over the flexible office marketplaces in important US cities, with an average of 38% of space in Los Angeles, New York, San Francisco, and Chicago currently designated as co-working spaces.

Opportunities Appear on Asia Pacific’s Horizon

Asia Pacific has made a substantial contribution to the expansion of the flexible office market due to the quick adoption of flexible office layouts, and workspaces that multinational corporations have permitted to draw in prospective employees.

By lowering the overall cost and expense incurred on transit and other facilities, this working pattern assists the employee in amassing a sizeable amount of savings.

A flexible office approach has been used by incubator and accelerator companies operating online in nations like India, China, and Australia. As a result, such tactics are expected to accelerate the expansion of the local market for flexible offices.

Fairfield’s Competitive Landscape Analysis

The global flexible office industry is consolidated, with fewer significant competitors present worldwide. The major firms are launching new items and enhancing their distribution networks to increase their global footprint. In addition, Fairfield Market Research anticipates that there will be further market consolidation during the next few years.

Who are the Leaders in Global Flexible Office Space?

• Alley
• ShareDesk
• Davinci Virtual
• Green desk
• Serendipity Labs
• Croissant
• Hubble
• The Office Group
• We Work India
• 91Springboard
• JLL
• Industrious
• Newmark Group
• The Great Room

Significant Company Developments

Collaboration Agreements

• March 2022: We Work India, a flexible workspace provider, collaborated with strongHer (the world's second women-focused tech fund) enterprises to establish 'Arise,' a program aiming to open doors for India's female entrepreneurs. WeWork laboratories, the worldwide incubation and acceleration arm of work, and strongHer venture's broad investment knowledge and investor network, together with WeWork lab's global acceleration platform, will lead the association.
• January 2022: 91Springboard, India's pioneering coworking community, has partnered with Google for Startups (GfS) to develop 'Startup Sprint,' a virtual program that teaches startups and entrepreneurs across India how to grow up and build their businesses online using modern digital business tools. The initiative's purpose is to assist entrepreneurs in adapting to a changing environment, with more people spending time online and the expansion of the digital economy.
• November 2020: BP and JLL have inked a Vested agreement to change BP's workplaces worldwide, excite BP workers, and support the energy company's Net Zero Carbon goals. JLL will assist BP with real estate portfolio, project, and workplace management. Workplace management will be introduced in stages, with the first phase set to go live in April 2021.

Acquisition Agreements

• May 2022: Industrious, the highest-rated flexible workspace provider, announced the acquisitions of two international companies: The Great Room in Asia and Welkin & Meraki in Continental Europe. The acquisitions will immediately add six new nations to Industrious' portfolio in key European and Asia Pacific markets, including Singapore, Hong Kong, Thailand, France, Belgium, and the Netherlands, totalling about 1,000,000 SF of existing and pipeline locations.

Expansion

• October 2021: Newmark Group, Inc. announced the international expansion of its flexible office platform as part of its broader plan to provide a diverse portfolio of commercial real estate services throughout Europe and important global markets.

An Expert’s Eye

Demand and Future Growth

As per Fairfield’s Analysis, the new trend of working in a distinctive flexible office is driving the market. The rising demand for a comfortable coworking space may result in a growth in coworking flexible offices, where the flexible office is favoured in large quantities in the retail sector since it aids in efficient cash flow, increasing the need for flexible offices.

Furthermore, technological developments have greatly aided the growth and development of various flexible offices. However, the flexible office market is expected to face considerable challenges because of high industry competition and the constant threat of data security.

Supply Side of the Market

According to our analysis, flexible office product producers are concentrating on expanding the capabilities and competencies of flexible offices by offering new concepts, particularly in the coworking category, which will aid the end users in working more effectively and efficiently.

To boost productivity, accuracy, and adaptability, flexible office manufacturers are working on technologically advanced versions that combine automation and AI. Real-time monitoring and intelligent features are becoming more common.

In addition, work-from-home culture is in response to rising sudden environmental changes. This can mean implementing a work-from-home culture and bring your own device system. These might make the flexible office impact even larger.

Global Flexible Office Market is Segmented as Below:

By Type:

• Coworking space
• Private offices
• Virtual offices
• Others

By Application:

• Media and entertainment
• IT and Communications
• Retail
• Consumer goods
• Others

By Space Provider:

• Independent brands
• Big brands

By Geographic Coverage:

• North America 
  • U.S. 
  • Canada 
• Europe 
  • Germany
  • U.K.
  • France
  • Italy
  • Turkey
  • Russia
  • Rest of Europe 
• Asia Pacific 
  • China
  • Japan
  • South Korea
  • India
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America 
  • Brazil 
  • Mexico 
  • Argentina
  • Rest of Latin America 
• Middle East & Africa  
  • GCC 
  • South Africa
  • Egypt
  • Nigeria
  • Rest of Middle East & Africa