Editor: Knotel filling for bankruptcy may have come as a shock to the flexible workspace sector, but it was not a surprise. Clearly, the pandemic created significant challenges for flexible workspace operators, and it is those with a leasehold model, which have faced their own rent commitments throughout the pandemic, that have suffered most keenly.
The impacts of Covid-19 for both operators and businesses have been grave, but it would be misguided to place the blame solely at the feet of the pandemic. In fact, it has in many ways accelerated a correction in the flexible workspace market – with leasehold models and density-dependent co-working likely to suffer further over the weeks and months ahead.
By contrast, operators on a freehold model who own their buildings have proven some of the most resilient and best able to support their clients through repeated national lockdowns.
For these operators, the horizon is bright. As lockdown eases, businesses are primed to migrate away from traditional commercial office space, instead embracing more footloose ways of working from flexible workspace, which offers more agile lease terms and a shorter financial commitment.
With employees also demanding a better work-life balance post-Covid and improved flexible working strategies from their employers, further growth for the flexible workspace sector would appear inevitable. Indeed, supply in London grew throughout 2020, rising by 4% despite guidance on working from home.
Commercial landlords are rightly taking note as the shift to flex accelerates. In another indication of its resilience, many property owners are now looking to enter the sector through management agreements with flexible workspace operators who understand the market and can deliver the right product for their building.
Undoubtedly, the pandemic has created new challenges. However, while there are certainly lessons to be learned from the troubles faced by Knotel, flexible workspace still has everything to play for.
Giles Fuchs, chief executive of Office Space in Town