While the failures of co-working giants like Knotel and WeWork may have highlighted flex space’s challenges, the demand for flexible real estate options remains strong. These failures were largely due to business model weaknesses, not a lack of market interest. In a recent occupier survey conducted by CBRE more than half of the respondents want flexible access to shared building services and amenities and nearly two-fifths want the ability to structure their lease and manage costs based on actual utilization of space.Flex space offers occupiers the adaptability they need in today’s dynamic economy. But, there hasn’t been the wide-scale adoption of flex offices that many have expected. One reason for this is that traditional valuation methods don’t include revenue generated by flex spaces as part of the long term cash flow due to their perceived risk. Fortunately, new advancements in valuation technology are providing solutions to understand and quantify the value of flex space.
Commercial real estate values typically rely on the predictability of long-term leases. With flex space, month-to-month rentals create uncertainty for investors and lenders, as tenants can easily leave during economic downturns. This perceived risk often devalues flex spaces, even though they can generate higher margins and increase building density....
RSK: Wonder why everything is based on what the tenant wants and needs and what is feasible for the owner/landlord? Unless there is a win/win it isn`t going to happen. Hard to have it both ways.
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- - Volume: 24 - WEEK: 13 Date: 3/26/2024 2:49:21 PM -