Traditional Lease Alternatives: Three Options to Consider for Your Workplace Portfolio
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The work-from-home (WFH) vs. centralized office debate continues to be polarizing, with constant headlines trumpeting points of view from each side of the aisle. It's clear that not everyone will agree, and a one-size-fits-all approach will not work.
As companies experiment with new flexibility models, alternatives to the traditional lease are emerging to meet the demands of more variable office time. This article explores three alternatives to the traditional lease. We dig into each alternative's opportunities, challenges, and key evaluation factors.
3 Workplace Alternatives To Consider
Executive Suites & Coworking
Over the last decade, executive suites and coworking spaces have emerged as a distinct office category, with 35,000 global locations, including over 6,000 in the United States. These shared workspaces offer various configurations, such as private offices, open workspaces, and team suites. Offerings vary from no frills, low-cost options to membership communities with rich amenities. Executive suites & coworking are not just a major city phenomenon; offerings are also popping up in suburban and secondary/tertiary markets.
Typical lease terms range from 1 to 12 months. While commonly used by startups and freelancers, enterprise occupiers have significantly driven sector growth, using these spaces for smaller company headquarters, regional/satellite offices, team suites, private offices, dedicated desks, or open coworking desks.
Operators range from local/regional providers to global brands like IWG, WeWork, and Industrious. There are also many investors who own the assets outright & operate their own serviced office brands, such as Expansive, Studio by Tishman Speyer, The Square by Hines, and Caddo Office Reimagined.
These spaces can provide a number of benefits to occupiers:
- Reduce underutilized centralized office space
- Avoid long-term lease commitments
- Reduce capital expenditures
- Reduce operational demands
- Simplify the leasing process
There are a number of potential downsides for occupiers to consider. The lack of dedicated space can lead to privacy concerns. Open layouts can be noisy and distracting for workers. Locations with high utilization levels can also have too few meeting rooms relative to demand. These are all important considerations when evaluating different offerings.
Other factors occupiers should consider when investing in these types of spaces include:
- Community dynamics
- Reputation of the operator (including financial stability)
- Type of workspaces available within the facility
- The ability to expand or contract desks or space as needed
On-Demand (Hourly/Daily Workspaces & Meeting Rooms)
On-Demand workplaces provide individuals and teams with pay-as-you-go access to diverse shared workspaces, meeting rooms, and amenities. Users can book hourly or daily increments for open workspaces, offices, conference rooms, phone booths, or event spaces.
Many of the larger global operators have products specifically designed to accommodate On-Demand users, giving them access to their global network of locations to utilize for this use. Major operators like Convene specialize in this model, while others allocate portions of their spaces for On-Demand users. Technology platforms like Desana, Deskpass, LiquidSpace, and Radious connect supply and demand in this category.
With no long-term commitments, On-Demand spaces are a popular way to explore flexible workspace options, whether you want to complement your centralized office or seek alternatives beyond your home or coffee shop.
Potential downsides are similar to the downsides of leased Executive Suites or Coworking spaces, with the added complication that priority will likely be given to contracted members over On-Demand users.
Key factors to consider when comparing On-Demand solutions:
- The operator’s breadth of workplace offerings and locations
- Ease of booking
- Access to amenities or services
- Availability of data and insights on how your employees are using spaces
Flex Suites & Managed Offices
These are secure, private spaces for mid to large teams, complete with furniture and essential tech infrastructure. Think of them as a blend of coworking flexibility with the privacy of your own suite. Similar to spec suites or pre-builts, this category is one that will likely be dominated by the institutional owner community in the future, but supply has yet to catch up to demand.
Typical lease terms range from 1 to 3 years, and these spaces serve as headquarters, regional, or satellite offices for teams with 20+ members. Most use a license agreement or short-form lease, streamlining the legal process dramatically compared to traditional leases.
The supply partners for these alternatives include institutional owners who have created their own brands around their flex offering, such as Abridge by Bridge Commercial, WorCPlaces by CP Group, Space+ by Brookfield, and Flex+ by Irvine Company. Additionally, some of the coworking operators & institutional owners mentioned in the Coworking section above offer this product as well as additional third parties, including Instant Office, Codi, and Knotel, who have products dedicated to this category.
These alternatives provide a higher degree of privacy and security sought by many organizations while generating coworking's operational and financial benefits. Current downsides include a relative lack of supply of these types of spaces and the increased lease commitment relative to Coworking or On-Demand spaces.
Key factors to consider when comparing alternatives include:
- Access to additional workplace options when needed (e.g., meeting and event space, coworking desks, etc.)
- Additional amenities or services available
- Ability to customize and reconfigure workspace
Comparing and Contrasting Alternative Workspace Types
Here’s an overview of the similarities and differences across Executive Suites & Coworking, On-Demand Workspaces, and Flex Suites & Managed Offices.
Flexibility and Adaptability
All three concepts prioritize flexibility, offering adaptable workspace solutions to accommodate various work styles and organizational structures.
All three have commitments that are shorter than a traditional lease (or no commitment at all), creating flexibility for occupiers.
Shared Facilities and Amenities
Shared facilities, services, and amenities are central to the design of each of these space types, fostering a collaborative and dynamic work environment.
Scope and User Base
Executive Suites & Coworking: Available in almost every market around the globe. Useful to a broad spectrum of occupiers, from freelancers and startups to enterprises.
On-Demand Workspaces: Common in many markets around the globe, but platforms tend to be more local in nature. The focus is more on immediate, sporadic usage without ongoing memberships.
Flex Suites & Managed Offices: Limited options in most markets. Targeted toward mid to large teams (20+ members), often serving as headquarters or regional offices.
Executive Suites & Coworking: More structured booking process often requiring membership.
On-Demand Workspaces: Easy and immediate one-off booking.
Flex Suites & Managed Offices: Executed via license agreement or short-form lease, accommodating larger teams with specific spatial requirements.
User Experience and Community Dynamics
Executive Suites & Coworking: More community-oriented given repeat usage patterns of members.
On-Demand Workspaces: More transient, transactional use of space.
Flex Suites & Managed Offices: Oriented toward mid to large teams seeking privacy, security, and a distinct team workspace.
Prior to the global pandemic, renowned real estate futurist Dror Poleg said, “The office of the future is not a place; it’s a network that enables individuals to access various locations suitable for their tasks.”
To stay competitive, companies are embracing diverse workplace options that bring benefits to both employers and employees, including flexibility and broader talent access. With shorter commitments and reduced capital expenses, flexible workspace solutions are important to the modern company’s real estate strategy.
About the Author
Charlie Morris, Founder of CREvolve, offers consultative services to institutional owners, enterprise occupiers, and PropTech companies, drawing on nearly two decades of global CRE experience. His expertise in brokerage and leadership positions equips him to guide clients through CRE disruption, with a focus on the flexible office economy and emerging technologies. He advises stakeholders on transforming legacy asset and portfolio management for future success using his diverse background and network.
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