Why landlords can no longer ignore flexible workspace

I’ve been involved in the flexible workspace market for over two decades and have seen the numbers available to property owners and operators. For me, it was never experimental – the business plan stacks up, and now others are beginning to see what I’ve long been saying.

Flexible workspace has often been pitched as a tactical solution, a way to activate vacant space, provide shorter-term income, or appeal to smaller occupiers who cannot commit to long leases. For many landlords, it was something interesting to consider, but rarely central to their core asset strategy. That perception is now changing.

At HEWN, we have published the second edition of our Flexible Workspace Return Index, analysing both 2025 performance and five-year trends across London. The results reinforce what many in the industry have begun to recognise; when delivered correctly, flexible workspace can outperform traditional office rents, often significantly, even in tough economic times.

In several London submarkets, premium flexible workspace products are achieving returns far above headline office rents. In some locations, the highest quality flexible workspace is generating returns approaching or exceeding 230% of prime rents. For landlords navigating a rapidly evolving office market, that is difficult to ignore.

One of the clearest lessons from our research is the flight to quality, mirroring the trends in the traditional lease market. Higher quality flexible workspaces have consistently outperformed traditional office rents across most London submarkets over the past five years. These spaces combine strong design, hospitality, technology and high quality amenities to deliver truly operational real estate. By contrast, lower-grade flexible workspace has shown much greater volatility and in some locations has struggled to match traditional rents.

This is a critical point for landlords. Flexible workspace is not a single category, it is a spectrum of products from managed space to coworking, and the difference between a well-executed offering and a poorly designed one is substantial. Another reason flexible workspace is gaining traction is that it reflects a broader shift taking place across the office sector.

Historically, office buildings have operated under a relatively simple model: long leases, fixed rents, and limited involvement from landlords. But occupiers increasingly expect something different from their workplace. Their expectations of what an office should provide have shifted. They want service – they don’t want to be dealing with bins or business rates.

Rather than thinking of flexible workspace purely as leased office space, landlords should increasingly view it as the hospitality layer of a building. It introduces a service-led operating model that complements traditional leasing, drives additional returns, while also unlocking new revenue potential.

This approach requires a different mindset. It involves thinking about workspace as a product that needs to be curated and managed, rather than simply leased and left. Importantly, flexible workspace should not be viewed as a replacement for traditional office leasing. In many buildings, it functions best as a complementary element that enhances the overall leasing strategy and occupier experience.

Occupiers increasingly use flexible workspace as part of their real estate strategy. Companies may initially take flexible space while assessing long-term requirements, or use it to accommodate project teams and temporary growth. Others may expand into conventional leases.

Buildings that offer high quality flexible workspace can capture this demand and keep occupiers within the asset as their needs evolve. In this way, flexible workspace becomes a gateway to longer-term tenancy rather than a competitor. The office market is going through a period of profound change. Hybrid working, shifting occupier expectations and the growing importance of workplace experience are reshaping how office space is used. Flexible workspace sits at the intersection of all these trends.

For landlords, the question is no longer whether flexible workspace has a role to play within their buildings. Increasingly, it is how strategically that role should be integrated into their broader asset strategy. Those who continue to treat flexible workspace as a peripheral product may find themselves missing an important opportunity.

Those who embrace it as part of a more service-led approach to office space may discover that it becomes one of the most powerful tools available to enhance both building performance and long-term asset value.