What does the future hold for commercial real estate?

Underlining this point, a Knight Frank study of UK businesses found that 81 per cent believe they need to implement a new workplace strategy post-pandemic; 53 per cent want their offices to have a greater amount of collaboration space; and 47 per cent envisage their real estate strategies to include a greater amount of flexible, serviced or co-working space.

If many employees are satisfied with working remotely, and therefore only commuting to an office once, twice, maybe three times a week, the experience on offer when they do visit their company’s workspace must be exceptional. The look and feel of the building; the technology that governs the use of the space; the sense of community; the meeting rooms and co-working facilities; and the additional networking opportunities or events in the building – these are no longer nice-to-have features, they are essential.

In the coming years, we will see an exponential rise in the number of flexible workspaces available. Crucially, however, these spaces will not solely be run by the existing brands we recognise (WeWork, The Office Group et al), but rather by commercial landlords that are converting traditional office buildings into their own branded flexible workspaces that suit the needs of today’s businesses and their employees.

For context, real estate service provider JLL predicts that 30 per cent of office space will be flexible in some form by 2030. Others put that figure much higher. 

How can commercial landlords adapt?

The shift currently taking place in the CRE sector will pose challenges for commercial landlords and their advisers. Put simply, with more companies seeking flexible options, landlords that are unable to offer exceptional, flexible facilities risk losing their highest paying and highest quality tenants.

Landlords must embrace the flexible working revolution, realising that businesses willing to take leases on traditional office space are few and far between. 

The first step is to make the necessary adjustments to the space itself – altering the design, functionality, and services on offer within the building will be key. It will be equally important for landlords to ensure they have the necessary technology in place, making it easy for businesses to utilise the space and facilities within it. 

Tech has another key role to play: it will help the ongoing evolution of workspace. By using data to analyse how their tenants interact with a space and use the services, commercial landlords (or those operating their spaces for them) can make ongoing improvements to their offering. They can also better identify and address unused space to ensure they maximise a building’s potential.