The Hybrid Working Revolution: Transforming Offices and Workplaces

1. Introduction

The COVID-19 pandemic has brought about an unprecedented shift in how we work. Hybrid working, where employees divide their time between working from home and working in the office or other locations, has gained momentum as a result. This development has major consequences for the real estate market, especially for the flexible workspace segment. In this article, we explore the crucial question: “How does hybrid work affect the use of flexible workplaces?”

2. The rise of hybrid working

The pandemic has drastically changed the global commercial real estate market. In America, there is a crisis in the conventional office market, while existing trends in the market for flexible workplaces and flexible offices are gaining momentum. Before COVID-19, working from home was often the exception, but the pandemic forced organizations worldwide to switch to remote work en masse.

Now, in the post-Covid era, it appears that many employees appreciate the benefits of this flexibility. Research by CBRE shows that employees come to the office on average 3.5 days a week, ranging from 3.1 days in London to 3.9 days in Beijing [¹]. These figures underline the need for flexible solutions.

The McKinsey report confirms this trend and adds that office visits are, on average, 30% lower than before the pandemic []. This suggests that hybrid working does indeed have a lasting impact on how we use office space.

Hybrid working offers benefits for both employees and employers. Employees experience a better work-life balance and reduced travel time, while employers can benefit from real estate cost savings and access to a wider talent pool. In addition, this flexibility often leads to increased employee satisfaction.

3. The growing market for flexible workplaces

The flexible workplace market experienced explosive growth even before COVID-19. This trend is accelerating, with impressive forecasts for the future.

CBRE predicts that by 2030, as much as 30% of all office space will be used flexibly [¹]. The Instant Group confirms this forecast and expects the wider flexible office market, consisting primarily of “Serviced Private Offices”, to grow to 30% of the total office market. In addition, The Instant Group forecasts that coworking offerings, including day passes, hourly rates, and full-time and part-time memberships, will increase from 1% to 5% of the total office market [²].

This growth is supported by the ambitious plans of flex space operators. According to the CBRE report, 74% of operators have plans to expand. In the APAC region, this percentage is as high as 83%, the highest of all regions [¹]. The Instant Group confirms this trend, adding that 39% of operators are focusing on expanding in city centers, while 28% are focusing on suburban expansion [²].

Growth is further stimulated by the high occupancy rate in flexible workspaces. The Instant Group reports that 44% of operators worldwide have reached occupancy rates above 80% [²]. This shows that demand for flexible workplaces is strong and has even recovered above pre-pandemic levels in many markets.

The McKinsey Report adds an important nuance to these growth expectations. While the demand for flexible workplaces is growing, in a moderate scenario, McKinsey predicts that the overall demand for office space will be 13% lower by 2030 than in 2019 for the median city in their study []. This underlines the importance of flexibility and adaptability in the office market.

4. Changing usage patterns of office spaces

The pandemic has fundamentally changed employee expectations. They want flexibility in working hours and locations, spaces that foster collaboration and creativity, and technologically advanced workplaces that enable seamless communication.

Organizations are adapting by rethinking their real estate portfolios, implementing desk-sharing and hot desking systems, and creating “hub-and-bespoke” models with a central office and satellite offices. The value that the traditional office adds to its end users and environment needs to be reconsidered. There is a greater need for multifunctional work environments where the user is central.

This change is confirmed by both the CBRE Report and The Instant Group, where 96% of operators say they've seen changes in how customers use their spaces [²]. One notable trend identified by The Instant Group is the increasing demand for private offices within flexible work spaces, which indicates a shift in user needs.

McKinsey adds an important insight: a clear 'flight to quality' is underway. Tenants are increasingly preferring high-quality (Class A) office spaces. This has consequences for the entire market, but especially for lower-quality (Class B and C) buildings that may be less suitable for the requirements of hybrid work [].

5. Opportunities for flex space operators

Flex space operators can address the need for flexibility by offering a wide range of memberships. There is a growing focus on spaces for collaboration and meetings, private workplaces for concentrated work, and multifunctional spaces that can be quickly adapted.

Technological investments play a crucial role. The CBRE report shows that 30% of flex space operators plan to introduce “Smart Access” into their portfolios in the next 12 months. Online booking platforms are becoming increasingly important, with 18% of operators considering them essential. In addition, 15% of operators worldwide see space management automation as a necessary technological investment [¹].

The Instant Group confirms this trend and adds that operators are also investing in real-time occupancy monitoring and video functionality in meeting rooms. These technological improvements enable operators to operate more efficiently and better meet the needs of their customers [²].

McKinsey highlights another opportunity: the trend towards shorter and more flexible leases. Tenants are leaning towards these contracts because of the uncertainty about future space needs. Flex space operators, who by nature already offer flexible solutions, are well positioned to take advantage of this trend [].

6. Challenges and Considerations

Despite the opportunities, there are also challenges. Balancing flexibility and creating a sense of community remains a complex task. The effective implementation of new technologies requires careful planning and investment.

One major concern is the impact on demand for traditional office space. In a moderate scenario, the McKinsey report predicts a 13% decline in demand for office space in 2030 compared to 2019 for the median city in the study. This underlines the need for property owners and developers to adapt to the new reality [].

McKinsey adds that the impact can vary greatly by region. In San Francisco, for example, a 20% drop in demand for office space is expected under the moderate scenario. These regional differences highlight the importance of location-specific strategies for flex space operators [³].

In addition, The Instant Group highlights the challenges that operators face with regard to inflation and rising energy costs. In response, 47% of operators expect to make rate increases of between 6-15% over the next 12 months. This will require a delicate balance between maintaining affordability for customers and ensuring the financial health of operators [²].

McKinsey also highlights the wider economic impact of these changes. They estimated that in the nine cities surveyed, a total of $800 billion (in real terms) in value is at stake by 2030 under the moderate scenario. This underlines the urgency for the entire real estate sector to adapt to the new reality of hybrid work [].

7. Sustainability and ESG Goals

A growing focus in the flexible office market is sustainability and achieving ESG (Environmental, Social, and Governance) goals. The Instant Group reports that operators are implementing various strategies to achieve Net Zero, including internal training and education programs, purchasing renewable energy, and more [²].

This focus on sustainability comes not only from social responsibility, but also from the growing demand from customers for sustainable workplaces. Flex space operators who lead the way in sustainability can thus gain a competitive advantage and become more attractive for environmentally conscious companies and employees.

8. Future perspective

The future of work seems to remain hybrid, with a growing role for flexible workplaces. We can expect further integration of technology into workplace management, as well as an increasing focus on wellbeing and sustainability in office design. The growth of space-as-a-service models is likely to continue.

The Instant Group predicts that the flexible office market will continue to grow and evolve. It is expected that there will be more diversification in the range of offerings, with a wider range of workplace solutions to meet the different needs of companies and employees. This can range from traditional coworking spaces to customized enterprise solutions for large companies [³].

In addition, the line between traditional and flexible office space is likely to further blur. Traditional hosts are expected to incorporate more flexible elements into their offerings to stay competitive in a market that increasingly values flexibility.

McKinsey introduces the concept of “hybrid places” - flexible, adaptive spaces that can address the changing needs of employees and companies. This concept is closely in line with the trend towards flexible workplaces and offers an interesting vision for the future of office space [].

Finally, McKinsey stresses the importance of location features. Factors such as the presence of knowledge workers, large companies, and urban structure influence the extent to which an area is affected by changes in work patterns. This insight can be valuable for flex space operators when choosing locations for expansion [].

9. Conclusion

The rise of hybrid working has an undeniable influence on the use of flexible workplaces. The market for flexible office space is growing rapidly and adapting to the changing needs of modern employees and organizations. Flexible workplaces offer the necessary adaptivity in a rapidly changing work environment.

There are plenty of opportunities for flex space operators, provided they can respond to the demand for technologically advanced, sustainable and flexible solutions. Success will depend on the ability to balance flexibility, community, and functionality.

The future of work is hybrid, and flexible workplaces play a central role in this. They bridge the gap between the traditional office and working from home, offering the diversity of workplaces that the modern professional longs for. With the right approach and investments, flex space operators can play a leading role in shaping the future work environment.

The insights from The Instant Group and McKinsey underline the importance of adaptability in this dynamic market. Operators who can anticipate changing needs, invest in technology and sustainability, and offer a diverse mix of workplace solutions will be best positioned to take advantage of the growing demand for flexible workspaces in the post-pandemic era.

List of sources

[¹] CBRE (2023). Overseeing the impact of hybrid working through agility in the Dutch office market

[²] The Instant Group (2022). Flexible Industry Survey 2022

[³] The Instant Group (2023). 2023 CRE Predictions.

[] McKinsey Global Institute (2023). Empty spaces and hybrid places: The pandemic's lasting impact on real estate.

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This article was written by YourSpace