The flexible office space imperative
Why elastic portfolios are becoming core strategy
Why elastic portfolios are becoming core strategy
Research
Global | April 2026
The Flexible Office Space Imperative
jll.com
© 2026 Jones Lang LaSalle IP, Inc. All rights reserved.
The Flexible Office Space Imperative
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A new mandate for agility
• The flex sector has stabilized after years of
volatility. Operators are increasingly looking to
replace risky master leases with management
agreements and revenue-share structures,
which is enabling renewed footprint growth
and investment activity.
• AI is emerging as a powerful new driver of flex
demand. Unpredictable workforce
transformation from AI makes planning for
long-term space needs challenging; flexible
space gives organizations the real-time
optionality to adapt as technology reshapes
team structures and headcount needs.
• Corporate adoption remains nascent: only 3%
of large enterprises use flexible space for more
than 10% of their portfolio. This gap between
strategic need and current uptake represents a
significant opportunity for occupiers, landlords
and investors alike.
Key highlights
The rise of the elastic portfolio
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Traditional methods of procuring office space via long-term leases and owned campuses have
historically had both advantages and shortcomings. In recent years, increased workplace agility and
smart building technologies have illuminated some of the inefficiencies of traditional leasing models
and exposed the challenges of fluctuations in headcount, shifting office attendance policies and
uncertain capital planning.
Globally, office utilization averages 54%, a significant 25-point gap from the average target of 79%.
This challenge is particularly acute in North America, with a 29-point utilization gap. Yet, downsizing
is not the definitive answer, as 43% of corporate leaders globally expect headcounts to rise in the
coming years, according to JLL’s Corporate Occupier Trends to Watch Survey.
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The paradox of controlling costs while preparing for growth is the primary driver behind the shift to elastic portfolios. This model allows organizations to:
Optimize costs By adopting a “core plus flex” strategy and converting a portion of the portfolio into a
variable expense, companies can better align real estate footprints with headcount
fluctuations throughout business cycles and adapt to technological change.
Accelerate occupancy Pre-built spaces and standard membership agreements allow businesses to rapidly scale up
or down to accommodate special projects, enter a new market or acquire talent.
Adapt to new ways of working Shorter lease terms, adaptable space design and increased geographic diversity enable
more agility to support iterative work models in an era of rapid innovation.
Despite the clear benefits, adoption of flexible space remains in its early stages for corporate occupiers. Across the globe, just 3% of corporations currently use flexible space for more than 10% of their total portfolio, and 42% of organizations allocate 1% or less of their headcount to flexible office solutions. This gap between strategic need and current implementation represents a vast upside potential for the sector.
Flex operators regain footing with sustainable models
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The flexible space industry has undergone significant
transformation. After a period of rapid, VC-fueled expansion
and a subsequent pandemic-induced correction, operators have
re-established financial stability and have resumed their growth
trajectory. This recovery was achieved by closing underperforming
locations, renegotiating leases and streamlining operations.
A crucial element of this evolution is the shift in deal structures. The flex industry is moving away from risky, fixed-rent master leases toward more financially sustainable partnership models. These models are market dependent and new variations are evolving, including:
Management agreements Operators partner with landlords to manage
flexible space offerings in exchange for a fee. This
model is favored by operators like Industrious
and is a growing part of IWG's strategy.
Revenue-share structures Landlords and operators share in the revenue
generated from the space, aligning the financial
interests of both parties.
Franchise arrangements Operators like Venture X are expanding their
network reach in a capital-light manner by
franchising their brands, particularly in suburban
and secondary markets.
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This shift has garnered renewed confidence from the investment community. Recent strategic
investments in the sector include the acquisition of Vast Coworking by New State Capital Partners and
Graycliff Partners in March 2026; Convene’s acquisition of NeueHouse in January 2026; CBRE's acquisition
of the remaining stake in Industrious in 2025; and Yardi’s DIP financing for WeWork in 2024. Major
landlords, including Tishman Speyer, Hines and Nomura, have launched their own serviced office
products to better serve tenants' appetite for agility.
AI supercharges the demand for flexibility Historically, tenants have turned to flexible space for tactical
reasons: accommodating small headcounts, managing
short-duration projects, accelerating speed-to-occupancy and
minimizing upfront capital expenses. While these drivers
remain relevant, the rapid advancement of artificial
intelligence adds perhaps the most compelling motivation yet
for widespread adoption of flexible space.
The transformative potential of AI is leading to uncertainty
regarding long-term workforce composition and headcount
forecasting. The pace of technological change makes it
challenging for organizations to predict which roles will be
augmented, replaced or created, and how team structures will
evolve. In this environment, supplementing long-term leases
with more agile portfolio management can add significant
strategic value.
Flexible space provides a direct answer to this uncertainty. By
incorporating short-duration commitments and pre-built
spaces into their portfolios, organizations gain critical
optionality. This allows them to adapt their physical footprint
in real time as AI reshapes their workforce needs, without
being locked into legacy assets that may no longer serve their
purpose. Organizations that supplement their conventional
real estate with flexible space will be better positioned to
navigate this era of rapid and unpredictable change.
The global operator landscape
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The flexible space market is dominated by a few key global players, but it also includes a diverse ecosystem of regional operators and landlord-led platforms. Understanding the primary operators and their distinct models is crucial for occupiers seeking the right flexible partner.
Operator # of locations
Global footprint Business model and notes
IWG 4,260 Global (121
countries)
The world's largest operator with unmatched
scale. Its strategy is increasingly focused on
capital-light growth through management
agreements and franchising. Operates multiple
brands including Regus and Spaces.
WeWork 586 Global (Gateway
Cities)
Emerged from bankruptcy with a streamlined
portfolio and renewed focus on enterprise
clients. Known for its strong brand recognition,
prime urban locations and integrated technology
platform.
Industrious 200+ Primarily U.S.,
growing globally
Now fully owned by CBRE. Pioneer of the
asset-light management agreement model,
positioning itself as a premium provider for
enterprise clients. Focuses on high-quality design
and experience management.
Vast
Coworking
200+ Primarily U.S.,
growing globally
As the world's largest privately owned franchisor
of coworking spaces, Vast Coworking operates a
network of over 200 locations across nine
countries under its three distinct brands:
Venture X, Office Evolution and Intelligent Office,
totaling more than 2.7 million square feet of
flexible workspace.
The
Executive
Centre
~170 Regional (APAC) A high-end flex operator with a strong
presence in trophy assets throughout the
Asia-Pacific region.
Landlord
platforms
N/A Varies A growing number of institutional landlords (e.g., British Land, GPE, Hines, Landsec, Merlin, Nomura, Oxford Properties, Tishman Speyer) are offering their own flexible space products. These range from turnkey suites to fully managed platforms, providing tenants with flexibility directly from the
asset owner.
Navigating the new deal structures
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The shift from fixed leases to partnership models creates new considerations for both occupiers and landlords. Asking the right questions is essential to structuring a successful flexible space strategy.
For corporate occupiers
• What is the right mix of traditional and flexible
space? Analyze your headcount projections, project
pipelines and the potential impact of AI on your workforce
to determine the optimal percentage of your portfolio to
dedicate to flexible solutions.
• Which deal structure aligns with our goals?
A pay-as-you-go membership might suit a mobile sales
team, while a private suite under a management agreement
could support a project-based team needing a dedicated,
secure environment.
• Does the operator's brand and culture fit ours?
Evaluate the operator's community, design aesthetic and
service level. A high-end serviced office option may be ideal
for client-facing teams, while a younger coworking
community might better suit creative or tech talent.
• What are the data security and IT protocols?
For enterprise users, ensuring the operator's infrastructure
meets corporate security standards is critical.
Flexible space may impact asset values and liquidity depending on its relative share of overall occupancy
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Valuation impact of flexible space relative to peer trades
-100
-50
0
50
100
150
200
-5% 15% 35% 55% 75% 95%
Implied cap rate impact (BPS)
Share of RBA occupied by flex operator (%)
Source: JLL Research, Real Capital Analytics (single-asset transactions larger than $5.0 million in the U.S. only) Note: Cap rate impact benchmarked to peer asset that traded in same year. Sales unable to be benchmarked to a peer have been omitted.
Historical data suggests asset values may be impaired
by flexible space when the share of that tenancy
exceeds 17% of rentable building area (RBA). On one
hand, the propensity of flex operators to gravitate to
attractive mixed-use and tech-centric submarkets can
help validate the appeal of these buildings, and flex
spaces can serve as an amenity to other users within
multi-tenant assets, helping drive leasing momentum
and improve tenant retention. However, the risk
associated with variable income streams complicates
the underwriting process and may limit potential
buyer pools. Over time, as management agreements
become more popular and flex space establishes a
longer track record of performance, its trailing income
will often exceed traditionally leased spaces and be
viewed more favorably by lenders and investors.
Number of transactions
Flexible space share of RBA
Positive implied impact
Negative implied impact
Average Implied Impact (BPS)
1-14% 23 12 -8 BPS
15-20% 3 3 +1 BPS
21-100% 6 8 +17 BPS
Transactions over $100.0 M
20 8 -8 BPS
Transactions under $100.0 M
12 15 +8 BPS
Size of bubble correlates with transaction price
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For landlords and investors
• Should we partner or build our own?
Outsourcing to an experienced operator with proven customer acquisition channels, service expertise
and operational know-how may be preferable to developing capabilities and managing these services
in-house.
• If outsourcing, which operator is the right partner for our asset?
Consider the operator's target clientele, financial stability and track record. The right partnership
should align with the building's positioning and the landlord's long-term financial goals.
• What does a management agreement mean for security and returns?
Unlike a master lease with fixed rent, a management agreement involves shared risk and reward.
Landlords should conduct thorough due diligence on the operator's ability to drive revenue and
manage costs. The return is variable but may exceed traditional rents in a strong market and/or provide
downstream revenue potential as flex members mature into larger organizations and lease traditional
spaces elsewhere in the asset.
• How does flex space impact asset valuation?
A successful flexible space offering can increase building traffic, enhance amenities and reduce
vacancy, potentially leading to a higher overall asset valuation. However, investors typically view
income from management agreements as less stable than long-term lease revenue and flexible space
operators have historically impaired building values when accounting for more than 17% of an asset’s
rentable building area (RBA).
Global adoption: A regionally nuanced picture
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While the demand for flexibility is a global phenomenon, adoption rates and market dynamics vary significantly by region.
This region is more focused on workforce and
footprint growth than portfolio reduction.
Employees in APAC markets like India (84%) and
China (77%) place a very high value on working in
vibrant neighborhoods with ample amenities,
making the location and experience components
of flexible space critical. Local and regional
operators, like The Executive Centre, hold a strong
market position alongside global players.
APAC
The U.S. has the most mature flexible space
market but also faces the largest office
utilization gap, creating a strong impetus for
adopting elastic portfolio strategies. Flex supply
as a percentage of total office inventory is
highest in major tech hubs like San Francisco
(5.3%) and New York (4.2%), but growth is
accelerating in Sun Belt markets such as Miami
and Austin.
The Americas
London serves as the primary global hub for flexible space in EMEA. London's market strength is
evidenced by substantial new flex transaction activity, with major players like IWG (Regus/Spaces),
WeWork, FORA and Industrious driving expansion alongside growing landlord-operated platforms. Paris
has demonstrated steady momentum with operators such as Deskeo, Morning and Regus leading a
market that shows significant room for continued penetration, while Germany's Big 7 cities have seen
coordinated expansion from Regus, Satellite Office and Mindspace, with Munich emerging as the most
active market followed by Berlin and Hamburg. The diversity of providers across EMEA - from global
giants to regional specialists - substantiates the market's maturity and ability to serve varied occupier
needs across premium, standard and hybrid workspace formats.
EMEA
United States
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• Sector performance is improving as corporate
demand rebounds and operators benefit from
recent cost-cutting measures achieved by
closing underperforming locations,
renegotiating leases and reducing operating
expenses.
• Flex operators are optimistic that the return-to-
office push, hybrid programs and ‘work near
home’ options will stimulate demand over the
long term. A major technology sector tenant
leased over 1 million square feet through
WeWork across several cities, including New
York, Dallas, Nashville and Silicon Valley, over
the past 18 months to facilitate their return-to-
office mandate, and other users are leveraging
flexible space for new market entry, hub-and-
spoke portfolios and short-duration space
needs.
• IWG has unmatched geographic scale and is
expanding aggressively amidst a shift away
from fixed-rent deal structures to management
agreements, revenue-shares and franchise
arrangements.
• WeWork’s North America division has emerged
from bankruptcy with a streamlined portfolio
and more manageable cost structure.
• Targeted investments are once again being
made into the sector, as demonstrated by the
acquisition of Vast Coworking by private equity
investor New State Capital in March 2026 and
Convene’s takeover of NeueHouse in January
2026. In recent years, Industrious and WeWork
have also received capital infusions to stabilize
their businesses and enable future growth.
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Major flexible space operators
# of U.S. locations
IWG (Regus, Spaces, etc.)
2,171
Vast Coworking (Venture X, Office Evolution)
200
WeWork 155
Industrious 138
Premier Workspaces 107
Overall office market statistics
+5.2% 12-month change in
leasing volume
+0.1% 12-month net absorption as
share of inventory
22.4% Total vacancy
Notable concentration of flexible space (million s.f.)
New York (12.4m)
Chicago (9.0m)
Los Angeles (7.5m)
Washington, DC (7.4m)Dallas
(6.7m)
San Francisco Bay Area (7.0m)
Boston (4.0m)
Canada
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• Consolidation within the operator landscape
has occurred throughout Canada in recent
years. During its global restructuring process,
WeWork announced the closure of seven
locations in Canada to exit unprofitable leases
and stabilize its business, with closures
concentrated in their largest markets including
Toronto, Vancouver and Burnaby, BC. On the
other hand, IWG and Industrious have
continued to expand, often through
partnership and management agreements with
landlords rather than traditional leases.
Landlords also continue to be active in offering
their own serviced office products, with
offerings like Oxford Properties’ OxWorx, which
offers pre-built flexible space solutions.
• Canadian companies are leveraging high-
quality flexible spaces as a mechanism to
encourage employees back to the office and
optimize footprints. Instead of mandating a
return to a single, central headquarters, some
firms like Shopify and Royal Bank of Canada
offer employees access to a network of
premium coworking locations. This gives
employees choice, shortens commutes and
provides access to high-amenity environments
that feel more like a destination than a
traditional office.
• Flexible office space has become the default
entry strategy for multinational corporations
testing the Canadian market. Global tech giants
like Stripe and TikTok exemplify this strategy by
having used premium flexible office suites for
their initial entry into Canadian tech hubs like
Toronto, which enabled rapid scaling and
market testing without the commitment of a
traditional lease.
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Overall office market statistics
+28.3% 12-month change in
leasing volume
-0.1% 12-month net absorption as
share of inventory
17.9% Total vacancy
Notable concentration of flexible space (million s.f.)
Rank Major flexible space operators
# of Canada locations
1 IWG (Regus & Spaces)
125
2 Industrious ~20
3 WeWork 15
4 iQ Office Suites 8
5 Staples Studio 7
Vancouver (1.3m)
Calgary (1.1m)
Montreal (1.8m)
Ottawa (650k)
Toronto (4.5m)
London
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• London saw robust flex office growth in 2025
with 32 new openings totaling 800,000 square
feet involving operators such as IWG
(Regus/Spaces), Huckletree, infinitSpace and
Industrious, confirming the city’s leadership in
the sector. The diversity of providers shows
London’s ability to offer a wide range of
workspace formats and amenities to suit
different occupier needs. Additionally, both
landlord operated centers and managed offices
have seen significant growth in openings over
the last 12 months.
• The average new opening spanned around
30,600 square feet, with infinitSpace delivering
the largest new site at 14 Gray's Inn Road,
Holborn, trading as Beyond.
• Operators broadened their portfolios in
response to rising demand for agile, short-term
solutions, fueled by hybrid working and
workforce transformation. The adoption of
management agreements and hybrid site types
reflects closer occupier-landlord partnerships
and the market’s growing maturity.
• Looking ahead, London's flex market is well
positioned as AI-driven transformation
intensifies demand for elastic portfolios.
Continued investment in partnership models
and technology-enabled space should sustain
growth as flexibility becomes essential to
corporate strategy.
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Overall office market statistics
+9.7% 12-month change in
leasing volume
-0.3% 12-month net absorption as
share of inventory
8.9% Total vacancy
2025 Flex Take-up (s.f.)/ Flex % of total take-up
Major flexible space operators
# of London locations
FORA 65
IWG 59
Landmark Space 43
WeWork 40
Workpad 34
London (800k)/(7.5%)
Germany
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• Germany’s Big 7 cities witnessed 23 new flex
space openings in 2025, with Regus, Satellite
Office, 1000 Satellites, WeWork, Mindspace
and Industrious leading the expansion. This
reflects both sector resilience and increasing
corporate appetite for flexible workspace.
• The average site size was 1,587 square
meters, with 1000 Satellite’s Munich location
being the largest. Munich topped the
rankings for new launches, followed by
significant activity in Berlin and Hamburg in
central and secondary districts alike.
• 2025’s openings were spurred by occupier
demand for short-term, ready-to-use models,
as firms aimed to reduce long-term risk in the
face of ongoing workplace change and digital
transformation. There was a clear shift to
hybrid and business center formats.
• A mix of international giants and regional
players highlights the depth of the market, as
owners work with operators to deliver flex
space as a strategic amenity, helping tenants
respond dynamically to evolving business
needs. IWG’s acquisition of Design Offices
will be significant for the German flex
space industry.
• Germany's flex sector is poised for sustained
growth, driven by diverse economic bases and
agile portfolios in the age of AI. The rapid
traction gained by management and hybrid
landlord-operator contracts and rising
corporate demand position the Big 7 as central
to Europe's flexible office evolution.
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Overall office market statistics
-0.8% 12-month change in
leasing volume
-0.7% 12-month net absorption as
share of inventory
8.0% Total vacancy
2025 Flex Take-up (sq.m.)/Flex % of total take-up
Major flexible space operators
# of Germany locations
IWG 70
Design Offices 34
Satellite Offices 14
Mindspace 14
WeWork 14
Hamburg (2.8k)/(0.7%)
Berlin (5.9k)/(1.2%)
Dusseldorf (3.2k) / (1.4%)
Cologne (7.6k)/(3.2%)
Frankfurt (2.4k)/(0.4%)
Stuttgart (1.5k)/(1.0%)
Munich (20.5k)/(3.5%)
Paris
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• Paris added 14 new flexible offices during 2025
as operators such as Regus, Come & Work, Joro
Office, Morning and Deskeo expanded their
presence, reflecting the market’s intensity and
high competition.
• New sites averaged 2,040 square meters, with
the year’s largest being Morning’s at rue de
Sofia, Paris 18th district. The Quartier Central
des Affaires remained the focal point for
openings, but growth also extended into
adjacent markets.
• The spread of new sites across different
submarkets highlights how operators and
occupiers are adapting to the need for
flexibility and access to amenities, essential for
attracting and retaining talent amid shifting
workplace priorities.
• The varied mix of coworking and hybrid
offerings showcased in 2025 further underlines
Paris’ adaptability, as operators cater to diverse
business demands and anchor the city’s flex
market for sustained growth.
• To enhance agility, companies are leveraging
coworking. This approach enables them to
retain a high-value central headquarters whilst
deploying teams in flexible and fully-equipped
satellite sites.
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Overall office market statistics
-8.8% 12-month change in
leasing volume
-0.8% 12-month net absorption as
share of inventory
11.2% Total vacancy
2025 Flex Take-up (sq.m.)/Flex % of total take-up
Major flexible space operators
# of Paris locations
Deskeo 97
Morning 82
Regus 69
MyFlexOffice 57
SnapDesk 27
Paris (26k)/(1.6%)
India
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• With flex space now an integral component of
occupier portfolio strategies, the sector
delivered its strongest performance in 2025,
recording robust leasing volumes that made it
the second-largest industry segment by space
take-up during the year. This growth has been
driven by managed operators meeting
enterprise demand for customized workspace
solutions delivered on an operating
expenditure (opex) basis.
• Fully-customized flex build-outs—delivered
quickly and offering flexible lease tenures—
contributed to record-high enterprise seat
leasing in 2025. Demand came from tenants
across multiple industries, with global firms
accounting for 77% of total seat take-up. The
“mainstreaming” of flex space aligns with the
adoption of hub-and-spoke occupancy models
and heightened scrutiny over capital
expenditure, as companies seek to maintain
operational agility while continuing to expand
their physical footprints in markets like India.
• While the Indian flex market remains
predominantly domestically driven—even
WeWork’s local operations are managed
through a domestic developer partnership—
the market has recently welcomed new
international entrants such as JustCo.
• Over the past two years, five flex operators
have pursued public listings: Awfis, WeWork
(via an offer for sale), IndiQube, Smartworks
and DevX. A further three to four are expected
to follow suit over the next couple of years.
Operators are increasingly diversifying
revenue streams, with many expanding into
design-and-build services. Some are also
developing dedicated flex campuses or
entire buildings, offering differentiated
products across managed, premium flex and
standard coworking segments.
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Overall office market statistics
+7.8% 12-month change in
leasing volume
+6.3% 12-month net absorption as
share of inventory
15.2% Total vacancy
Notable concentration of flexible space (million s.f.)
Major flexible space operators
# of India locations
Awfis 246
Indiqube 129
Tablespace 80
WeWork 73
Smartworks 56
Source: JLL Research, company disclosures Note: National office statistics (Q4 2025) are for Grade A space in seven cities. Flexible space locations are based on information collated from multiple sources including company disclosures and may include areas outside JLL-tracked geographies.
Delhi NCR (15.1m)
Mumbai (9.2m)
Pune (12.3m)
Bengaluru (32.1m)
Chennai (8.3m)
Kolkata (1.9m)
Hyderabad (11.2m)
China
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• Premium operators like The Executive Centre
remain resilient, serving multinational
corporations in prime locations with stable
occupancy and selective expansion. In
contrast, coworking brands—particularly those
locked into fixed, above-market leases signed
during the 2018–2019 peak—have exited or
significantly downsized.
• Some landlords are increasingly competing
directly, converting vacant floors into flexible
space or offering spec suites with full fit-outs
and leasing incentives—eroding the traditional
speed advantages of third-party
flex operators.
• New local entrants are emerging, but this trend
is more prevalent in Mainland China, where
operators mainly target low-rent submarkets
through asset-light, revenue-sharing models
that minimize capital exposure. In Hong Kong,
activity remains tightly concentrated in core
areas; non-prime or non-premium buildings
struggle to attract consistent demand.
• This shift reflects a broader evolution: the
sector is maturing toward more sustainable,
operationally efficient models. Success
depends on landlord collaboration, alignment
with corporate real estate strategies—including
portfolio consolidation—and continued
emphasis on workplace flexibility.
The Flexible Office Space Imperative
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Overall office market statistics
+17.0% 12-month change in
leasing volume
+2.4% 12-month net absorption as
share of inventory
19.5% Total vacancy
Notable concentration of flexible space
Major flexible space operators
# of China locations
IWG (Regus, Spaces, etc.)
~250
The Executive Centre ~90
WeWork ~70
MFG ~30
Source: JLL Research; company websites Note: Office statistics (Q4 2025) reflect Grade A space in Beijing, Guangzhou, Hong Kong, and Shanghai.
Beijing
Shanghai
Hong KongShenzhen
Guangzhou
Japan
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• Japan’s flexible office market has strong
momentum, driven by consistent demand from
both domestic companies and multinationals.
Hybrid work is now embedded in corporate
strategy for many companies, while rising
relocation and construction costs have made
flex space a more compelling and pragmatic
solution for swing space, satellite offices and
project teams.
• Operator activity reflects growing confidence.
Several large-scale openings launched in
central Tokyo in 2025, with new locations filling
quickly. The pipeline remains healthy, including
the fourth location of IWG's premium brand
Signature in Shinjuku - opened in February
2026 - and the 10th Tokyo site of The Executive
Centre, slated to open in July 2026. Key players
are opportunistically expanding.
• Pricing dynamics show a dual trend:
monthly membership fees are rising in places
like central Tokyo due to solid
demand, while selective operators continue
offering concessions to secure longer-term
commitments.
• Demand is becoming more discerning,
with tenants prioritizing well-located
buildings with strong transport access,
modern specifications and institutional-
grade infrastructure. Even submarkets that
previously experienced softer demand —
such as the Bay Area — are now
showing measurable signs of recovery,
supported by the economy’s better-than-
expected performance and supply-
constrained conditions in the broader
office market.
The Flexible Office Space Imperative
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Overall office market statistics
+3.0% 12-month change in
leasing volume
+6.5% 12-month net absorption as
share of inventory
0.7% Total vacancy
Notable concentration of flexible space (sq.m.)
Major flexible space operators
# of Japan locations
IWG (Regus, Spaces, etc.)
206
Workstyling 103
WeWork 31
H1O 19
The Executive Centre 11
Source: JLL Research, company websites Note: Office statistics (Q4 2025) reflect Grade A space in Tokyo 5-Kus. Flexible space estimates represent CBD areas tracked by JLL.
Tokyo (480k) Osaka (70k)
Fukuoka (30k)
Nagoya (20k) Yokohama (20k)
Australia
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• The flexible office market is in recalibration, not
retreat. Demand remains steady, but success is
increasingly selective—driven by alignment
with hybrid work patterns, transport access and
experiential design.
• Operator strategies are diverging. Operators of
underperforming or aging locations—
particularly those competing with landlord-
offered spec suites—are responding with
closures, discounted rates or incentives to
remain competitive. Established players are
expanding selectively: Waterman is opening
sites in non-traditional office markets; The
Commons has taken large tranches in new
developments like 33 Cremorne Street located
within the Melbourne Fringe market (noted for
wellness-focused design and strong uptake);
and WOTSO assumed WeWork’s former North
Sydney space at 50 Miller Street.
• Corporate adoption of flex continues to rise.
Flex space is now a non-negotiable for many
corporates during lease negotiations. With
traditional deals increasingly under 1,000
square meters, landlords are embedding flex
operators as a value-added feature to
strengthen leasing outcomes and building
competitiveness.
• Occupier preferences have shifted decisively
toward well-connected locations. In this
environment, operators differentiate through
amenities and workplace experiences that
support productivity and talent retention.
The Flexible Office Space Imperative
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Overall office market statistics
-17.8% 12-month change in
leasing volume
+0.3% 12-month net absorption as
share of inventory
16.5% Total vacancy
Notable concentration of flexible space (sq.m.)
Major flexible space operators
# of Australia locations
IWG (Regus, Spaces, etc.)
~30
The Commons 15
Waterman Business Centre
15
Servcorp 13
WOTSO 12
Source: JLL Research Note: National office statistics (Q4 2025) are for all grades and geographies tracked by JLL. Flex space and location estimates represent JLL tracked stock for Melbourne and Sydney, not the whole market.
Sydney (200k)
Melbourne (230k)
The shift to agile consumption
The Flexible Office Space Imperative
30
This ongoing transition toward flexibility will be a fundamental reshaping of the relationship between tenants and space. The life cycle of the flexible space sector shows a clear progression from instability to strategic integration:
2021-2023 A period of volatility marked
by lease terminations,
operator restructurings and
conversions of leases into
management agreements.
2024-2025 A recovery phase, where
landlords began backfilling
closed units and the
return-to-office push drove
a significant uptick in
enterprise demand for agile
occupancy solutions.
2026 and beyond A new era of strategic adoption.
Demand for pre-built, short-
term spaces becomes standard
as tenants prioritize portfolio
agility. Broad deployment of AI
and workforce transformation
will make flexible spaces even
more appealing.
The evolution of office space is accelerating toward a more agile, on-demand consumption model.
Years ago, JLL projected that 30% of office space would be consumed flexibly by 2030 . This pivot to
agile consumption encompasses a broad ecosystem of coworking, serviced office, spec suites and
landlord-managed amenity spaces.
Call to action
The Flexible Office Space Imperative
31
For corporate occupiers
• Treat your portfolio like a platform,
not a project.
Shift from periodic rightsizing to continuous
optimization. Implement monthly or quarterly
scenario planning that integrates utilization
data, business forecasts and market
intelligence to maintain portfolio elasticity.
• Pilot and partner strategically.
The flexible space market is diverse. Start with
small-scale pilots to test different operators,
locations and deal structures to find the best fit
for your teams. Engage with flex transaction
professionals who can navigate the nuances of
new partnership models.
• Integrate data for holistic decisions.
Break down the silos between CRE, HR, IT and
Finance. A unified data environment is essential
for understanding how space impacts
productivity, well-being and the bottom line,
enabling evidence-based decisions about your
workplace strategy.
For landlords and investors
• Assess your portfolio for flex potential.
Identify static vacancies and underutilized
spaces that could be activated and enhanced
with a flexible space offering. This can create
new revenue streams, serve as a powerful
amenity for the entire building and drive
leasing momentum.
• Choose your model: Partner or
self-perform.
Evaluate the trade-offs between outsourcing to
a third-party operator versus building an in-
house platform. The decision should align with
your firm's operational capabilities, risk
tolerance and asset strategy.
• Invest in foundational technology.
Whether partnering or self-performing, success
in flex requires robust technology for space
booking, community management and space
analytics. This investment is crucial for
delivering a seamless user experience and
optimizing operational performance.
Conclusion
The Flexible Office Space Imperative
32
Commercial real estate is evolving from a
commodity to a consumer product. Tenant
preferences are shifting, and the era of fixed
space for a fluid business world may be nearing
an end. Occupiers are demanding more agile
portfolios as they prepare for an AI-driven
future. Landlords are responding to these
business needs by embracing partnership
models or cultivating ecosystems of pre-built
spaces and amenities to deliver the speed,
agility and experience that tenants demand.
Within this new environment, flexible space is
maturing from a niche alternative into an
essential component of modern corporate real
estate strategy.
Sources and methodology
33
The insights in this report are based on a comprehensive analysis of proprietary and public data sources,
including JLL's lease database, MarketSphere, third-party data from IWG’s public securities filings and
Yardi, and various JLL surveys and reports, including the 2026 Corporate Real Estate Trends to Watch,
Global Real Estate Technology Survey, Future of Work Pulse Survey and interviews with JLL's clients and
brokerage professionals.
The Flexible Office Space Imperative
jll.com
Research authors
Research at JLL
JLL’s research team delivers intelligence, analysis and insight through market leading reports and services that illuminate t oday’s commercial
real estate dynamics and identify tomorrow’s challenges and opportunities. Our more than 550 global research professionals tr ack and
analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and glob al perspectives.
Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions.
Scott Homa
Head of Property Sectors
Research, Americas
Scott.Homa@jll.com
Alex Colpaert
Head of Property Sectors
Research, EMEA
Alex.Colpaert@jll.com
Lee Fong
Head of Property Sectors
Research, APAC
Lee.Fong@jll.com
Matthew McAuley
Global Property Sectors
Research Senior Director
Matthew.McAuley@jll.com
About JLL
For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped cl ients buy,
build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with
annual revenue of $26.1 billion and operations in over 80 countries around the world, our more than 113,000 employees bring t he power of a
global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAY. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorpora ted. For
further information, visit jll.com.
©2026 Jones Lang LaSalle IP, Inc. All rights reserved.
The information contained in this document is proprietary to Jones Lang LaSalle and shall be used solely for the purposes of evaluating this proposal. All such
documentation and information remains the property of Jones Lang LaSalle and shall be kept confidential. Reproduction of any part of this document is
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34
Melissa Ansley
Global Flex Transactions
Lead
Melissa.Ansley@jll.com
Slide 1: The Flexible Office Space Imperative Slide 2: A new mandate for agility Slide 3: The rise of the elastic portfolio Slide 4 Slide 5: Flex operators regain footing with sustainable models Slide 6: AI supercharges the demand for flexibility Slide 7: The global operator landscape Slide 8: Navigating the new deal structures Slide 9: Flexible space may impact asset values and liquidity depending on its relative share of overall occupancy Slide 10 Slide 11: Global adoption: A regionally nuanced picture Slide 12: United States Slide 13 Slide 14: Canada Slide 15 Slide 16: London Slide 17 Slide 18: Germany Slide 19 Slide 20: Paris Slide 21 Slide 22: India Slide 23 Slide 24: China Slide 25 Slide 26: Japan Slide 27 Slide 28: Australia Slide 29 Slide 30: The shift to agile consumption Slide 31: Call to action Slide 32: Conclusion Slide 33: Sources and methodology Slide 34