Half of the world’s largest firms plan to cut office space – here’s why flexspace is the future

Half of the world’s largest firms plan to cut office space – here’s why flexspace is the future

Data released in June by commercial real estate experts Knight Frank confirms what we already know: there’s a revolution underway in commercial real estate. How can property owners, landlords and investors make the most of the increasing demand for flexspace?

There's a notable shift happening in commercial real estate. Knight Frank polled 350 real estate leaders at international firms and found that half of those with 50,000+ employees plan to reduce their office space by 10-20% in the next three years. The reason? A shift towards hybrid working patterns. Instead of spending five days a week in a central office, employees are now blending their time between a local workspace, their homes, and their company's central headquarters.

This change isn't just about adapting to new ways of working; it's also about cost-effectiveness. In fact, according to IWG's 2022 CFO survey, 82% believe hybrid is a more affordable business model than the traditional nine-to-five office grind.

As companies reduce their need for large, permanent office spaces, the demand for flexible workspaces is growing. This trend opens a door of opportunity for building owners, property investors, and landlords. By partnering with IWG, they can not only meet this increasing need for flexspace but also capitalise on the evolving landscape in commercial real estate.

Flexspace and hybrid models make business sense

Many businesses are switching to a hybrid model enabled by a network of flexspaces because a growing body of evidence shows it can benefit their profit margins, people, and the planet.


When companies downsize their offices and rely more on a network of flexspaces, it can result in significant facility cost savings – Cisco saved $500m in the last five years due to a shift to hybrid working, much of that in its property portfolio. What’s more, an independent Global Workplace Analytics survey recently showed that hybrid working can save organisations an average of more than £9,000 per employee per year.

IWG’s global network of flexspaces allows businesses to strategically position themselves closer to their workforce, clients or key markets, which allows them to tap into a much broader, location-independent talent pool.

Businesses embracing hybrid enjoy productivity gains, too. A hybrid model in which workers balance time working at local flexspaces, company headquarters and at home has been shown to boost productivity by 3-4%, according to leading economics Professor Nicholas Bloom of Stanford University.


One of the reasons for the hybrid productivity boost is that workers are healthier, happier and more engaged and energised when they spend less time commuting to city centre offices. Shorter trips to local flexspaces mean employees can reclaim time previously spent in traffic or on public transport. This extra time can be spent with loved ones, on hobbies, or engaging in regular exercise.

This move to hybrid work is more than just a trend – it's becoming an expectation. So much so that IWG's research indicates that half of workers would consider leaving their jobs if forced to return to the traditional office model. In a recent survey of 2,000 office workers, 88% stated that they would expect the hybrid model to be offered as a key benefit in any new role.

Clearly, offering hybrid working options does more than just boost productivity. It can also make a company far more attractive to both existing and potential employees, providing a strong aid to talent acquisition and retention.


The environment also benefits hugely from hybrid. When businesses downsize their property portfolios and rely more on flexspace, it helps them meet their Net Zero targets – and collectively, this adds up to significant reductions in emissions.

Indeed, IWG’s landmark study with ARUP shows that hybrid can reduce urban carbon emissions by a staggering 70% in the UK and up to 87% in the US. That’s because hybrid businesses are able to cut emissions from both commuting and energy use in workspaces.

To put this into perspective, let's consider a bustling city like Los Angeles, known for its dense traffic and long commutes. The whitepaper concludes, “Overall, taking into account both transport- and building-related emissions, if a worker in Los Angeles stopped traditional five-day commuting into the city centre and instead worked close to home, their combined carbon footprint would decrease by 70%.”

The opportunity

Commercial property brokers can capitalise on the growing demand for flexspace by partnering with IWG. We can provide your clients with flexible solutions that adapt as they evolve and offer convenient scalability in unpredictable times.

Discover how an IWG partnership can offer multiple solutions for your clients and increase your chances of making a sale.