How Smaller Operators are Succeeding in Flex
Anyone involved in the flexible workspace industry knows that demand for these spaces is surging. In the EU alone, 83% of landlords report that the requirement for flexible workspaces is outpacing that of traditional offices. This shift offers landlords a broader selection of operators to collaborate with—or even the opportunity to develop and manage their own flexible spaces. Similarly, tenants now enjoy more options than ever before, with the UK’s flexible office market doubling between 2019 and 2023, reaching 167 million square feet.
While these statistics are encouraging, they also raise critical questions about what it takes to thrive as a flexible workspace operator in a highly competitive and saturated market. The saying, “a rising tide lifts all boats,” suggests that everyone will benefit from industry growth. However, the reality is that operators cannot afford to be complacent. With landlords and tenants spoilt for choice, success demands a compelling value proposition, a strong brand, and a well-structured commercial strategy. Without these, even in a booming market, failure is possible.
So, how can smaller operators not only compete with but also outperform their larger competitors?
Leveraging Flexibility as a Smaller Operator
Smaller operators often face stricter budget constraints compared to larger companies and institutional landlords who are increasingly investing in their own flexible workspaces. However, smaller players can capitalize on their agility and flexibility to create a product-market fit (PMF) that stands out.
One of the key lessons from the WeWork saga is the danger of a one-size-fits-all approach. Plenty of us have visited multiple WeWork locations, noticing the striking similarities in design, facilities, and ambiance. While this consistency is a hallmark of global brands and can provide a familiar experience for customers, it’s not always the best approach for flexible workspaces.
In the flex space industry, a cookie-cutter model can be limiting. Smaller operators have the advantage of being able to tailor their offerings to meet the unique needs of each location. This flexibility allows them to create spaces that truly resonate with the local market, a luxury that larger operators with rigid brand guidelines often can’t afford.
Making the Right Space for the Right Market
It’s tempting to view the flexible workspace market as a homogenous global entity. But the reality is that different markets require different flex solutions. Every region, city, and even neighbourhood has its own unique demands and opportunities.
Smaller operators, unburdened by rigid corporate branding, can better align their offerings with local market needs. This is increasingly referred to as adopting a “hospitality mindset”—delivering an exceptional customer experience tailored to the specific market. The hospitality industry offers clear lessons in this regard; even global hotel and restaurant brands adjust their offerings to meet local customer expectations, balancing corporate guidelines with local demands.
The flex space industry is moving in this direction, but there’s still work to be done. A report titled “User Preferences for Coworking Spaces; a Comparison Between the Netherlands, Germany, and the Czech Republic” highlights that many coworking operators struggle to design business models that cater to different user demands. The report notes that coworking space users have diverse preferences and that smaller, local operators are increasingly specializing in specific user groups, resulting in a wide variety of strategies, locations, and setups.
Tailoring Your Product to Local Needs
To succeed, small operators must deeply understand the motivations and preferences of their local customers. This insight allows them to leverage their agility to adapt their offerings, achieving the ideal product market fit.
Consider the differences between Berlin and Los Angeles. In Berlin, flexible spaces are popular among both large companies moving away from traditional private offices and a burgeoning fintech start-up scene. In contrast, Los Angeles sees high demand from creatives, contractors, and freelancers, with a focus on coworking passes and single-person offices. Both cities have thriving flex space markets, but the needs of the customers are vastly different. A one-size-fits-all approach would likely fail in either location.
Smaller operators may lack the budgets and brand recognition of larger players, but they can more than compensate with their ability to be nimble and responsive. By customizing their tech, functionality, design, and amenities to meet local demands, they can create a compelling and differentiated offering that resonates with the market.
In conclusion, smaller operators in the flex workspace market have a unique opportunity to thrive by embracing their flexibility and tailoring their offerings to meet the specific needs of local markets. This approach, combined with a strong understanding of the customer and a commitment to delivering a superior experience, can position them to not only compete but to excel in an increasingly competitive industry.
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