Flexible Future
CRE is rigid by nature because of the physicality of the built environment; external (buildings) or internal (fitouts). As a result, this inherent rigidity has shaped the Lessee and Lessor leasing equation forever.
But things are changing, and lessees are wanting more flexibility.
The Corenet Flex Factor event last week with panellists Sabrina Kwok of The Executive Centre, Anna Mears of Rubberdesk, and James Calder of Placing, was focussed on the Flex office sector and the discussions reinforced that flexibility in the office markets is the future.
Sabrina made a bold prediction that Flex would be the dominant user of office space in the future. This makes sense.
On the demand side, the number of smaller office users is increasing, they are seeking more flexibility in lease terms, and they are the biggest share of the office markets. This makes them the perfect candidates for the flex market.
Further, James emphasised that the next generation is wired differently. They have a different sense of community and connection and hence, a different view of work and the workplace. Flex has been growing almost in line with this change.
In fact, We Work started in 2010 as a response to the economic downturn and the change in generations, technology and desire for more flexibility.
What about the supply side? Anna hit it on the head. Flex space doesn’t need to be in Premium or A Grade buildings. Why not in the lesser grade buildings? There are plenty of well located buildings in our CBD’s that could easily accommodate flex office use. It’s certainly a cheaper and easier alternative to something like residential.
But what is stalling this change? Rigidity.
And speaking of rigidity, the discussion returned to how antiquated the terms “landlord” and “tenant” really are. My preference is “lessor” and “lessee”. What do we call these new lessors who offer space in a more flexible way? James suggested calling them Spacelords. Brilliant. Does that make the tenants The Resistance?
The office markets are shifting and that’s because people, companies, and their preferences are shifting.
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