Where we work

The pandemic accelerated the demand for flexible office space but the performances of the key players in this market have varied greatly.

WeWork, possibly the most well known brand, has experienced a dramatic drop of almost 99% in its stock price. Landsec, however, has recently opened three new Myo locations - its flexspace sub-brand - across London, tripling its flexible office footprint to over 210,000 sq ft.

We are seeing new entrants into this market as well as vacancy rates rising, bringing record levels of available space - and demand. This has had a marked effect on the sector.

Traditional landlords
Many landlords are now venturing into the flexible workspace sector, eager to capitalise on increasing demand. Some are incorporating flexible space options into their existing office buildings, while others are making their initial foray into the office sector through investments in flexspace. Instant's Future Of Flex report shows that landlords are choosing the most involved options in creating their own flexspace brand, rather than partnering with existing providers or leasing to them. For example, British Land has successfully launched its own flexspace brand, Storey.

Flexspace brands
With traditional landlords creating their own flexspace sub-brands, the two key players in this market have responded differently:

WeWork
Following a failed initial public offering that brought WeWork to the brink of collapse, WeWork engaged in negotiations with its landlords to secure reduced rent, underwent a financial restructuring, and successfully reduced its debt burden.

However, WeWork has not been able to reverse its financial losses and some bearish investors express concerns about its profitability since the rising trend of remote work and the company's reliance on general employment levels. The uncertainty surrounding WeWork's future elicits differing opinions among investors, with some hopeful for sustained profits and others anticipating potential further restructuring.

IWG
IWG, the owner of Regus, has established itself as a more conservative and stable player. Since 1989, IWG has steadily grown, relying on a combination of owned and leased properties with over 3,500 branches globally. The company faces similar challenges to WeWork, experiencing a decrease in demand for dedicated co-working spaces and slower earnings. However, IWG's approach involves transitioning towards a more asset-light service provider model and expanding its partnerships, aiming to manage two thirds of its business in this way.

To embrace the hybrid work trend fully, IWG has welcomed numerous new partner locations in 2022 and plans to add approximately 1,000 more globally this year. To remain competitive in this market, IWG must adapt to the hybrid work trend, offering flexible and eco-friendly workspaces while differentiating itself through personalised services to capitalise on growth opportunities.

Co-working hotels
As hospitality was hit hard by the pandemic, it started to rethink its business model by offering its properties as mixed purpose, where people can work, sleep and eat. According to Colliers, turnover could be increased by up to 20% where hotels provide office spaces that enable co-working and interaction.

The hybrid hospitality concept is already being pioneered by Zoku, an independent hotel brand designed for the new generation of business travellers. Recognised by Forbes and CNN as one of the world's best, Zoku (seen above) has taken the lead by introducing home-office hybrids in European cities, becoming the first hotel company to do so. Accor Hotel, a French hospitality brand, has also ventured into the coworking arena by launching its very own brand, WOJO. As part of its initiative, workspaces are now available within various Accor hotels across Europe. The idea of promoting flexible working within hotels has been thoroughly explored and proven its appeal and initial success.

The rising demand for hybrid, remote and distributed working has presented challenges and opportunities for traditional landlords and flexspace brands. By embracing innovation, optimising services, and tapping into the demand for flexible work solutions, companies in the sector can navigate the post-pandemic realities and emerge as successes in the evolving workspace ecosystem.

Emily Lin