Nearly two thirds (62%) of commercial landlords are struggling to attract prospective tenants to fill traditional office spaces – in signs the workplace has changed during the pandemic.
A similar proportion have seen a “notable shift” in tenants’ demands during the pandemic, including terms and use of space.
To attract more tenants most (71%) landlords are looking to convert at least some of these office spaces into co-working spaces, likely inspired by the likes of WeWork, research from infinitSpace shows.
Wybo Wijnbergen, chief executive of infinitSpace, said: “What businesses want and need from their office has been steadily evolving over the past decade, but the pandemic has kicked the pace of change into overdrive.
“Our research shows that, as hybrid working becomes commonplace and businesses look for more collaborative and engaging workspaces, many landlords are struggling to attract tenants if they don’t have flexible offerings.
“Encouragingly, most office landlords are responding to this challenge. From the terms of the leases and the facilities on offer, to the ways their workspaces foster innovation and offer a great tenant experience – commercial landlords are evidently looking to transform their buildings to fit the ‘new normal’.”
Since the start of 2020 three in five (59%) office landlords have begun offering shorter and more flexible leases.
Over half (52%) added new facilities to allow tenants to collaborate when inside the building, such as meeting rooms or breakout areas, while 63% have added facilities to improve the wellbeing of tenants, such as a gym or relaxation space.
Wijnbergen added: “Our data shows that many traditional offices will be converted into flexible workspaces in the coming years. In many instances, this will involve the landlord themselves entering into a long-term, inflexible lease with an operator, which then runs the flexible workspace in their building.
“But instead, office landlords should feel empowered to manage their own brands. This will lead to a more diverse and dynamic commercial real estate market.”
UK commercial landlords currently dedicate an average of 33% of their office portfolio to some form of flexible or co-working spaces. By 2026, this is forecast to rise 11% to 44%.