Should Flexible Office Leasing become Miami’s Next Normal?
Miami, Florida Commercial Real Estate Agent Kevin Albert Krueger /July 1, 2020
Since Spring 2020’s invasion of Covid 19 and Dade-County Government’s quarantine, navigating Miami’s real estate market has challenged many office managers’ long term decision making for operating their otherwise stable businesses. With this blog our office brokerage seeks to educate and advise Miami office tenants about smart commercial real estate solutions throughout Miami-Dade.
Let’s first define the flexible office market as a tenant-centric “lease” that empowers its office “members” an adjustable cost, time or design for their workspace. That is, many of us interchangeably use today’s trendy coworking term for all flex office spaces but certain workspaces are designed with open-floor plans that foster communities where neighboring businesses and their guests mingle to develop projects or socialize. So define coworking as community, proximity, collaboration + shared resources like WiFi, cold brew coffee, snacks or ping pong paddles. No matter the office design or culture of its tenants, a flexible office may simply be identified when a tenant can select short lease lengths dating 1 to 12 months, rather than 3 to 5 year obligations; their workspace size may easily expand or contract within days’ notice; and for such flexibility tenants pay a premium per square foot versus traditional office leases. Members receive peace of mind from the amenities and convenience of a fully managed workspace. That premium may pay off when a flex office tenant’s business moves, grows or closes since they are mobile and not obligated to the expense of unbreakable long term contracts.
In fact, flexible office leases have a 4 decade history with several interchangeable descriptions dating back to the Executive Offices of the 80s when Lawyers or Accountants spun off to their own firms and required physical access to their clients and peers in their respective business districts. Landlords with unrented office space leased to independent white collar workers as an afterthought to their core leasing strategy rather than a branded business model. As Manhattan’s REflex Suites’ CEO Todd Beyer indicates, “Many office landlords are revisiting this old school strategy to incorporate the coworking’s trend into their models for the current workforce.”
As the Tech & Finance industries blossomed throughout the 90s, flexible office brands like Regus developed and quietly expanded globally with significant guidance from brokers intent on serving their landlords’ listings. Then by the time that Millennials graduated college, entered the workforce and generally clashed with their Boomer bosses‘ staid corporate approach youthful professionals demanded more than casual jeans on Fridays- they wanted free craft beer, dammit; and got it.
photo courtesy of Vox
Freelancers and entrepreneurs on a tight budget have always had their most affordable option to work from home, on their laptops…in their jeans or pajamas; as they had recently worked in college. But humans seek companionship or teamwork and Millennials became attracted to that open-floor plan workspace in their office options that mimicked their university library, cafeteria or dormitory, but with modern finishes and business socials. REflex Suites’ Beyer also co-produces his new Happy Hour BYOB Build Your Own Business podcast targeted to young founders and reminds us that: “A lot of the modern “coworking” grew out of Silicon Valley’s tech culture. Companies like google, facebook and other hot tech companies implemented things like beer, ping pong, bean bag chairs and more to attract fresh talent. The coverage of these attractive companies allowing their employees to work out of hoodies and on a bean bag chair while drinking kombucha was just as much of a driver to these modern coworking spaces as anything else. People in college and freelancers saw that environment as their ideal work place and if they couldn’t work for google how else could this concept be brought to the masses? Hence… coworking.”
If 2010’s flex office members expected complimentary cold brew while stroking their hipster beards communing on their comfy couches at WeWork (last decade’s darling), then expect the 2020’s to roar back to the future with executive office style private suites in order to alleviate health concerns triggered by our global experience with the Covid19 quarantine. Current CDC guidelines for cleanliness and social distancing might make open-floor plans a thing of the past. New flexible office buildouts will feature more private offices, entrances, kitchenettes and less common areas or shared spaces. However, more Conference Rooms will be installed to serve the uptick of Remote Workers when they require face-to-face Meetings. To attract and retain office members, expect immediate redesigns from coworking spaces to much less communal but healthier environments.
By now we’ve all consumed enough about WeWork’s heavily financed (by SoftBank) rapid expansion to become the planet’s number one office tenant (by square footage), attracting entrepreneurial members with stylized open office spaces. CoWorking became extremely trendy, both in professional lifestyles and for landlords to earn top dollar rents and increase the marketing value of their address. A successful business model that WeWork over-leveraged compared to its leased occupancy. However, more stable flex office providers that expanded wisely like Quest, Regus or Novel will thrive this next decade with some analysts predicting that flexible leases will serve 30% of America’s office market by the year 2030.
Major brands are not the only players selling flexible office memberships as several national brands and hundreds of regional operators have thrived until this Covid-19 quarantine produced their paradigm shift.
What changes should Office Landlords, Tenants and Brokers expect? Mass media covered CoWorking’s new social distance guidelines that most flex offices self-imposed already or started redesigning their interior layouts. Restrictions ranging from 6-foot spacing among office bullpen desks to abolished shared kitchenettes and those beloved beer taps drastically remove the most featured experiences that some flex offices highlight to attract their members into their professional community.
As work-from-home has become more socially and economically accepted, America’s office market will bear witness the next decade to increased #WFH population, traditional office leases accepting shorter terms and continued growth of Flexible Office specific services targeted memberships. If you’re interested to shop for such workspaces, then know that Flexible Office providers have always been welcoming to prospective members sampling a day at their location. And services like DeskPass even provide a rotation of participating Flex Offices for office dwellers committed to such workspaces, but that seek a variety of locations, layouts or professional networks.
Certainly, coment your office tenancy perspectives on our blog – please add to this on-going dialogue with our economy’s significant paradigm shift for the modern workspace and team environment. Email any private questions or suggestions to Kevin@RISErealty.com or even better, call RISE directly at 305.859.1606 and share what is new in your work life.