Companies continue to experiment with their office space, often eliminating traditional cubicles and replacing them with open floor plans, shared workspaces and high-tech meeting space. You can debate whether workers appreciate this trend, but what do these changes mean for the commercial real estate market?
JLL recently looked at this trend in a new report, Flexible Office Space is Disrupting the Commercial Real Estate Industry. And the findings? Flexible office space is having a big impact in the Midwest.
JLL reported that the amount of flexible office space in the Great Lakes Region – which includes the states of Pittsburgh, Indiana, Michigan, Ohio Kentucky – has doubled during the last five years. In just 2017, the Great Lakes region added nearly 600,000 square feet of flexible office space, according to the report.
And 2018 is already on pace to surpass the total of nearly 400,000 square feet of flexible office space added to the region in 2016.
What is flexible office space? It’s a bit of a catch-all term. Usually, it means office space that isn’t dominated by traditional cubicles. JLL says that it is any office space designed to increase portfolio flexibility, reduce occupancy costs and boost collaboration.
Co-working remains the most prevalent type of flexible space, but this term also includes exective suites and incubators.
Co-working features shared workspaces with open, communal environments. These spaces often include communal lounges and shared amenities. Executive suites are a bit different. They feature an office-heavy layout that provies a more private setting for workers, according to JLL. And incubators are designed for start-ups and entrepreneurs. These usually feature such perks as mentoring services and early-stage funding opportunities.
JLL found that co-working spaces make up 59 percent of the flexible office locations in the Midwest. Many of these spaces are popping up in downtowns or dense neighborhoods. Most shared workspaces are still owned by local businesses, but JLL says that big players like WeWork and Spaces continue to scout the Midwest for expansion opportunities.
Overall, WeWork, Regus and Servcorp represent 42 percent of the global flexible office space market, JLL said. However, the flexible office space market is a fragmented one, with JLL reporting that there are an estimated 7,600 operators of flexible office space across the country.
What’s it like to work in a flexible office in the Midwest? JLL reports that that the average flexible office space is 17,000 square feet. Amenities typically include free beverages, snacks, WiFi, conference rooms, bike racks, shower rooms and outdoor spaces.
Pricing models for flexible work spaces vary, but JLL reported that the average dedicated desk at a co-working facility costs $227 a month. A dedicated private office costs an average of $511 a month.
Where are flexible office locations common? JLL says that Detroit is home to 38 flexible office locations, while Columbus has 29. Cleveland has 28 flexible office spaces, while Indianapolis has 25 and Cincinnati 23, according to JLL.