Why Landlords are Converting Their Office Spaces with IWG

International Workplace Group (IWG) is a flexible workspace solution that has been operating for over three decades, with a footprint that includes 1,200 open locations across North America. Now, following the COVID-19 pandemic, organizations all over the world are re-examining their commercial real estate portfolio and redefining what it means to own office space in the era of flexible workspaces. By partnering with IWG and converting their offices to flexible workspaces, commercial landlords to institutional investors can avoid being left behind.

“The number of flexible workspaces is growing every day, and there is also great progress in what those spaces look like,” said Wayne Berger, CEO of IWG, The Americas. “Many companies are promoting a model in which employees still need to commute to an inconveniently located main office a few days a week. That is creating dissension among organizations because people want the same level of autonomy they had during the height of the pandemic. Because of that, employees and people are pushing back on the organizations that are trying to deploy bridge plans when it comes to flexibility.”

Instead of splitting their time between home and a centralized office, more and more employees are expressing a desire for a third option — a hub-and-spoke model where they can choose to go to a flexible workspace in their local communities. With this evolution in work culture, the global flexible workspace industry is projected to nearly double in size, from $7.97 billion to $13.03 billion, by 2025.

“We are seeing some of the world’s largest organizations rationalize their real estate portfolios upon lease end-dates,” said Berger. “They are shifting their approach away from the traditional lease and more towards flexibility, not only because of the savings they can see financially, but also because it is aligned with what employees are asking for.”

Landlords with commercial office space traditionally rely on long-term capital leases to maintain their businesses. These leases can run for 10 years or longer. But with remote and hybrid work on the rise and the culture of work rapidly evolving, the smart employers, Berger says, are downsizing or eliminating their brick-and-mortar office space altogether.

Berger says this shift is causing another interesting trend to emerge; The 15-Minute City. The concept, which was coined by a professor at the University of Paris, is the idea of having everything residents need for work and leisure — shops, offices, amenities, entertainment — accessible within a 15-minute bike ride from their home.

“The goal is to provide a better lifestyle for people, and that has become a key driver as to where people choose to work,” said Berger. “It is also a great step towards saving our planet by eliminating unnecessary commutes.”

In line with the 15-Minute City concept, Berger says IWG used to primarily grow in downtowns and then moved to the suburbs. Now, they are seeing a huge acceleration of demand in small towns of 10,000 to 15,000 people because workers want to stay close to home.

“Looking ahead, we are going to see more vacant space within the commercial real estate sector while also seeing a great surplus of need within flexible workspace and coworking,” said Berger. “People want to work on their own terms. It is really simple, but the only way to achieve it is to have a great network of flexible workspaces that are also convenient. That is why we are working so hard to partner with building owners, institutional developers and franchise owners, to expand our network to 30,000 locations. That will make the ease of access incredibly simple. Our footprint continues to grow because that desire to live and work in the same city is growing in popularity and necessity.”

Watch the conversation here.

Learn more at https://www.iwgplc.com/en-gb/develop-a-location.