The recent rumours around WeWork’s latest funding round and support from SoftBank do not take away from the fact that the flexible office space model is a direct response to the change in how businesses want to rent office space.
Both SMEs and large corporates are demanding access to office space that is available on flexible-term contracts and ready to move into tomorrow, with no upfront costs. Alongside this, companies are engaging in a war for talent where the quality of a workplace is a huge component of the employer brand and is fast becoming a top reason to stay in or join a company.
This change in workplace dynamics has led to flexible office space in London increasing from 0.5% of the total market to around 5% in five years – and less than 30% of that is WeWork.
Traditional leases with 10-year commitments and huge upfront costs are no longer fit for purpose in such a fast-paced business environment where technology allows companies to grow and shrink headcount in a matter of weeks.
This flexibility has brought down the average tenancy contract for an office to 10 months – a stark difference from the decade-long commitments of traditional leases.
WeWork’s rise has led to a long tail of thousands of flexible operators around the world that did not exist five years ago. WeWork is here to stay, just as the flexible office sector is. The latest financing round just determines how big WeWork’s piece of the pie will be.