The Future of Real Estate

The Flex advantage: How on-demand offices empower companies to reframe their workspaces

April 17, 2024

Deloitte’s “2024 commercial real estate outlook” found that the two leading concerns for CFOs are the continued rise of interest rates and the high cost of capital. This seems to indicate that even if companies are signing leases, they will likely be tight on refit spending. This dynamic is exacerbated by another key finding - the majority of CFOs believe revenues will decline from 2023 levels.  

If, ultimately, companies don't have the capital to reprogram their new or existing offices, a valuable workaround is to leverage on-demand workspace that offers employees the spaces they need, without major financial liability. Also called an Agile Portfolio approach, by leaning into spaces designed as places people want to work and collaborate, companies can flex in response to demand and scale use up or down as needed.

Deloitte Figure 3A - 2024 commercial real estate outlook

The shifting office landscape 

We are all familiar with the seismic shift in the office landscape since 2020. The rise of remote and hybrid work models has led many companies to embrace flexibility and evaluate their real estate strategy.   

Many companies have opted to reduce their real estate footprint, lease less traditional space, and instead utilize flexible space and coworking providers. Companies can flex up or down as headcount and projects fluctuate, providing an elastic infrastructure for their business.

Alongside the financial gains sit clear benefits for employees, who can work from convenient locations closer to home while still coming together when needed. This ‘hub-and-spoke’ office model leverages flex space for collaboration and connection, while reducing overall business risk

Spaces as places you want to be

Offices can no longer just be spaces where employees gather - they need to become places where people want to be. This means designing and curating office environments that align to the needs of today's workforce.  

Companies should aim to create offices that are fit for purpose - spaces that directly support the work being done. For example, providing flexible areas for focused work and collaboration, comfortable spaces for rejuvenation, and technology-enabled rooms for hybrid meetings. The cookie-cutter ‘cubicle farm’ approach no longer fosters productivity or employee satisfaction.  

To attract and retain top talent, organizations must view their physical offices as an extension of their culture - places that empower people to do their best work. This cultural shift doesn't necessarily require expensive renovations. Through on-demand solutions, companies can easily "try before they buy" to create offices aligned with the future of work.

Balancing interest rate rises and capital costs with on-demand

Rather than investing significant capital into long-term leases and office build-outs, companies can leverage on-demand space that is move-in ready. This allows them to support growth and changing workplace requirements in an agile way that reduces the burden they’re facing from rising interest rate and increasing capital costs.

On-demand flexible space helps organizations address budget concerns in a few key ways:

  • Supports growth without long-term commitments  - Organizations can quickly scale up or down as business needs change, without being locked into long leases providing financial flexibility.
  • Save on upfront capital expenditures  - Fully built-out, on-demand space means no major upfront investment into construction and fit-outs. Companies can get the space they need without major capital outlays.
  • Pay only for what you use  - Platforms like Desana allow organizations to access high quality global workspace and organizations only pay for what is booked
  • Reduce risk - Shorter commitments and the ability to adjust space usage reduces the risks associated with long-term leases and capital investments.

How global companies leverage flexibility and workspace insight

One of our clients, an American multinational corporation and technology company, was experiencing rapid growth at their London headquarters, leading to increased demand for meeting rooms and collaboration spaces. They turned to Desana to quickly meet their evolving needs. 

Through the Desana platform, teams were able to easily search for and book meeting rooms, private office and hot desks on-demand within key geographic parameters. This gave them the flexibility to scale up space for their teams as needed, without requiring long-term leases or major capital expenditures.

By leveraging Desana's on-demand flexible space solution, they were able to support the London team's growth and changing needs, while optimizing their capital and real estate costs. The real estate team received all booking data in their customer analytics dashboard enabling them to make real estate investment decisions using real, rather than projected, usage needs.

People first

This should be a no-brainer but it is worth highlighting the importance of putting people first in order to thrive in the hybrid world. Rather than forcing employees into spaces meant to maximize density and efficiency, organizations need to creatively adapt the environment. 

Elastic is a fantastic example of a leading organization doing this well. They now have full modulable offices with everything on wheels. This is true office flexibility their spaces can be quickly transformed to accomodate a town hall, conferences or traditional desk work. They’ve successfully built comfortable, inspiring settings where people actually want to work and connect with colleagues.

The future workplace must revolve around human experiences. Organizations that embrace flexible spaces as part of a people-first real estate strategy will gain competitive advantage in attracting and retaining talent.

An agile future for all?

The commercial real estate market has undergone significant shifts over the past few years as a result of the pandemic and changing workplace dynamics. Organizations today face mounting financial pressures, including rising interest rates and costs of capital. At the same time, they need to provide workplaces that meet the needs and preferences of modern knowledge workers. 

Rather than making significant capital investments in leased office spaces, organizations can take advantage of flexible workspace solutions. Leveraging space on-demand through providers like Desana enables companies to quickly secure high-quality spaces tailored to their requirements. This allows them to support hybrid work and evolving workplace trends without major financial commitments.

On-demand flexible space can effectively accommodate changing business needs. Avoiding long-term leases and build-outs enables greater agility. This helps organizations enhance productivity while managing costs judiciously during uncertain times. 

We are constantly surprised that, despite the clear benefits, some organizations have remained fixed on failing RTO mandates and a commitment to ‘how things were’. We believe that the world of work has changed, and more importantly, continues to evolve at a rapid rate. The organizations that lead in the future will be those that are ready to embrace change, are willing to test and put their people first.