As economic recovery begins and businesses adjust to a new normal, forward-looking franchisees are seeing strong opportunity in the flexible workspace market.
After more than a year of debate, uncertainty and rumours, the verdict’s in: the office isn’t dead after all. In countries where restrictions have mostly been lifted, commuters are once again packing trains and buses at rush hour. But that doesn’t mean we’re back to business as usual. Welcome to the era of the hybrid office.
Polls show the majority of workers would prefer to work remotely at least some of the time, in what’s known as the hybrid model. In response, companies are rethinking the role of the office in a post-pandemic world, with flexible workspaces playing a major part in their future. In 2020, JLL predicted that flexspace would make up 30% of all office space by 2030 - a figure that, post-pandemic, is likely to be much higher.
Investors looking for stability and growth during the pandemic and beyond are increasingly looking to flexible office space for strong potential returns. It’s now the leading option for franchise investment – partnerships with global serviced office provider IWG rose by 350% in the first half of this year and a total of 20 new franchise partners joined the brand between January and the end of June 2021.
In this article, we explore the market’s dominant trends so that existing and potential franchisees can stay ahead of the curve.
Hybrid working
Hybrid working – where workers can split their time between an HQ, a local office and home – is fast becoming a reality for employees returning to the office. Google is one of the biggest names experimenting with the concept.
Some studies show that up to 83% of workers want to go hybrid after the pandemic. Meanwhile, the UK government has announced plans to give employees the right to request flexible working from day one, ramping up pressure to end old-fashioned presenteeism.
Hybrid working is a key driver of the booming flexspace franchise market. With many companies looking to downsize central HQs and invest in smaller offices nearer to employees’ homes, flexible workspaces are an attractive solution.
The scalability of flexspace is another key benefit: businesses can increase or decrease their space at short notice, depending on how much is needed. Partnering with IWG involves less commitment and less expense than entering rigid long-term leases.
The 15-Minute City
Hybrid working and an increased demand for workspaces in neighbourhoods closer to residential stock, is leading to a rise in franchise partnerships that will develop flexspace locations in suburban areas. This growth could help pave the way for the arrival of the 15-Minute City – a network of neighbourhoods where everything a resident needs (including work) can be reached within a quarter of an hour on foot or by bike.
The realisation of this concept, originally espoused by Professor Carlos Moreno of the Sorbonne, can already be seen happening in London and the surrounding counties. Demand for IWG centres has rocketed in suburban and rural locations around the world during 2021. In response to this shift, the operator of brands including Regus and Spaces has signed new ‘franchise cluster agreements’ focusing on outer London, in particular East London and Essex commuter areas, as well as suburban areas of South London.
Mixed use developments
Retail and hospitality were hit hard by the pandemic. Lockdowns and restrictions forced many places to close indefinitely. And, when they were finally allowed to reopen, some simply couldn’t afford to continue and shut their doors for good.
Now, many of these abandoned units are being repurposed and having new life breathed into them as flexible workspaces.
British department stores such as House of Fraser, Debenhams and John Lewis are already planning to convert their under- or disused spaces into coworking offices. In Bogotá, Colombia, a new Spaces location will be situated in one of the city’s most influential shopping malls - a sign that, across the globe, smart investors are seeking to place workspace alongside leisure, entertainment and shopping facilities.
Flexspace locations in retail hubs and districts have the advantage of being close to all the amenities workers want and need, as well as excellent parking facilities and transport links.
Age is no barrier
Right now, flexspace franchising seems like a young person’s game. IWG research shows business leaders aged 18 to 35 who are interested in franchising are almost three times more likely than those aged 55 and above to be searching for investment opportunities in flexible office space within the next 18 months.
However, experienced investors are keen to cash in on the growing flexspace market, too. Some 40% of CEOs and chairpersons who are considering franchising are now looking to explore flexible office space in the near future.
Stable investment
Finally, in these uncertain times, investors want to put their money into a market or business that’s not only able to weather a storm but also has demonstrable potential for future growth.
Unsurprisingly, one of the main reasons cited for going into franchising is the security it offers partners. IWG research found that two-thirds (66%) of those already interested in franchising believe that franchise businesses are a safer bet during tough economic times, with the same percentage agreeing that franchising offers the added protection of working with trusted and established brands.
Flexspace franchisees are also almost three times as likely to feel positive about their business prospects for the next 18 months than those who aren’t interested in franchising.
IWG Founder and CEO Mark Dixon believes they’re right to anticipate healthy growth. The firm has added two million new customers to its global network of flexible workspaces so far in 2021, with further franchise partnerships set to build on this success. “With the signing of a growing number of partners, we anticipate continued momentum in the second half of the year,” he said in June.
Hybrid working is already delivering “spectacular benefits for employees and employers alike,” Dixon argues – and he describes the change in working culture that’s been accelerated by the pandemic as “irreversible”.
“At IWG, we are aiming to expand our network, mostly by franchise, to provide a flexible workspace in every village, town and city,” Dixon explains. “The future of work is already with us, and it’s only going to improve.”
IWG has been pioneering flexspace solutions for businesses for more than 30 years. Looking for your next investment opportunity? Read about IWG’s franchising partnership today.
