Flexible office space has become a prominent feature of the global real estate landscape in recent years, as the nature of work and the modern economy evolves alongside rapidly advancing technology. Flexible office space is “any space (desks or more comprehensive office space) provided on short-term leases, at variable prices or alternatively a membership basis”, according to commercial real estate services firm JLL, and thus encompasses both co-working and serviced office spaces.

The top 10 flexible office space providers ranked by number of greenfield projects in 2018 – which includes Singapore-based Justco, Malaysia-based Common Ground, and Israel-based Mindspace – invested in 653 projects across 45 countries from 2014 to 2018, according to greenfield investment monitor fDi Markets.

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Investments from the top 10 flexible office space investors have grown year on year, and the number of greenfield projects at least tripled each year from 2014 to 2017. In 2018, the number of greenfield projects undertaken grew by 189.4% to 437, accounting for 2.86% of all projects made across all sectors, according to fDi Markets.

This growing trend stems from stakeholders in the real estate sector looking for more versatile alternatives to traditional long-term leasehold office space. Reasons include companies looking for lower cost office space that fosters creativity, landlords looking for ways to improve occupancy rates and returns on their properties, and freelancers, SMEs and start-ups looking for collaborative workspace environments.

WeWork's rapid gains

While there are numerous flexible office space providers across the world that offer open-plan offices with stylish interiors and amenities, such as complimentary coffee and beer stations, WeWork, Spaces and Knotel made the most greenfield investments in 2019.

WeWork – which is working towards a public listing and is heavily backed by Japan-based SoftBank and its $100bn Vision Fund – was once more the most active global crossborder investor in the early part of 2019 across all sectors. It put an estimated $170m into 89 greenfield FDI projects from January to April, according to fDi Markets. If sustained, this investment spree across 26 countries is on track to surpass WeWork’s own record of 219 greenfield FDI projects in 2018. The fast-growing office space provider spent $2.5bn to expand its global operations in 2018, according to a recent Financial Times article.

WeWork currently boasts 466,000 members and 485 locations worldwide, and recently announced its first location in Africa with a new opening in Johannesburg, South Africa later in 2019. The flexible office space and services provider has members from entrepreneurs and start-ups to SMEs, but has enjoyed growing interest from larger enterprise companies.

“We're seeing more and more larger companies, from HSBC to Deloitte and GoPro to Citi, embrace this new way of working because they want to be in creative and innovative environments and find that this helps attract and retain top talent,” says Patrick Nelson, head of real estate for EMEA at WeWork.

Spaces' new frontiers

The world’s largest office space provider IWG (formerly Regus) has been competing with WeWork through its rival brand Spaces, which it acquired in 2015. Spaces ranked as the second most active global investing company across all sectors in 2018, undertaking 138 greenfield FDI projects, according to fDi Markets. From January to April 2019, the flexible office space provider continued this streak with 47 greenfield FDI projects. Similar to WeWork, Spaces’ flexible office solutions cater to a wide array of clients, but SMEs have been its most prominent clients.

“We’ve found in recent years that our Spaces centres have been particularly popular with SMEs – scale-ups that are working on a global level or are aiming to do so in the near future. These businesses fit Spaces well and globally we’re seeing more and more of them take advantage of the strategic and business benefits that our flexible workspaces offer for a growing company,” says Martijn Roordink, co-founder and managing director of Spaces.

Knotel's precise targets

Knotel,which was founded in 2015, has taken a different approach to WeWork and Spaces, as it caters its workspaces to specific company needs rather than having a shared space for numerous individuals.

“We are not a co-working or corporate suites brand. We deliver flexible workplace solutions to the Global 2000 and enable companies to focus on their core business. All spaces are unique to the customer, not shared, and reflect the companies’ brands and work processes,” says Edward Shenderovich, co-founder and chairman of Knotel.

Through its bespoke approach, Knotel has found its niche and invested in 20 greenfield FDI projects between January 2018 and March 2019, according to fDi Markets. It ranked as the fourth most active investing company across all sectors in the first quarter of 2019, as it undertook 12 greenfield FDI projects in seven countries across Europe, North America and South America.

Since forming in 2015, Knotel has expanded from a single location to being active in more than 170, but has focused on major cities with larger corporate sectors rather than the broad expansion of its counterparts.

“These large, deep office markets are absolutely where the action is. We have made it very plain that we are about to open in Dublin and Amsterdam, and there are several other cities. This is because corporates go there,” says Amol Sarva, co-founder and CEO of Knotel.

These numerous investments signal that flexible office space providers are undeterred by the uncertainties arising from geopolitical tensions and protectionist ideals that have affected FDI across many other sectors. “The ‘crisis’ of Brexit has been extremely good for our business, but it has been extremely bad for other people’s business. Flexible office thrives in periods of uncertainty and transformation,” says Mr Sarva.

In a changing world of work, rivals have found there is room in the market for everyone but only time will tell if the sector’s rapid expansion can be sustained.