Despite the enormous upheaval caused by vast swathes of the workforce retreating to home offices, some flexible office providers are experiencing a sudden surge in demand. Essential services and consumer goods providers are among those sectors driving demand for space at a rate of knots as COVID-19 continues to reshape the way the entire world lives and works.

One Melbourne flexible office provider has been busier than ever as some essential services tenants have doubled workforces in just weeks and required more space. At the same time, Ray White Office Leasing Sydney is offering landlords flexible leasing fee solutions for short term leases on a case by case basis, a new database of coworking tenants potentially seeking private space in direct leases, and consulting on adapting office space to more flexible fitted and furnished solutions.

For tenants, Ray White, like most commercial agencies, is facilitating one-agent-one-tenant office inspections complying with social distancing rules and offering flexible lease solutions as well as the ability to aid those with surplus space to either sublease in part or entirety.

Rapid expansion

While many tenants occupying flexible space at CreativeCubes.Co three Melbourne locations struggle to survive others are battling the opposite problem. One tenant, the home care business Nurse Next Door, has grown by at least 40 per cent in the past few weeks, the company’s new employees and demands on administration staff requiring sudden need for more space.

 “We’ve literally been able to support them on a moment to moment basis as their needs have changed,” said CreativeCubes.Co co-founder and CEO Tobi Skovron. “We’ve provided desks to meeting room space from hour to hour, and it’s been seamless, rather than have them waiting around trying to find an office.”

Given current strict social distancing rules, CreativeCubes.Co was already a step ahead thanks to a layout with 7.5 metres between desks throughout its spaces, a combination of 80 per cent private, high-quality office mini-suites for one to 120 people and 20 per cent coworking space.

After Nurse Next Door, about a dozen more tenants at each CreativeCubes.Co location are also experiencing rapid COVID-19-driven expansion. “There’s delivery services like Menulog, fast food giant KFC, other health sector clients like Nurse Next Door and companies in fast moving consumer goods,” Mr Skovron said. “We have various big brands coming to us saying ‘we simply can’t keep up, we need space’.”

Meanwhile, membership payments for struggling tenants have been suspended, although some have been requested to temporarily remove their equipment to make room for newcomers. “Businesses in fast moving consumer goods simply need a lot of space,” Mr Skovron said.

CreativeCubes.Co is going all out on hygiene, too. Eight hours of cleaning takes place nightly across the three sites and hospital-grade cleaner Viraclean has been added to an artillery of regular disinfectants.

“Our focus has always been on being the best not the biggest. We pride ourselves on being 6-star quality but at market rates or below said CreativeCubes.Co co-founder and CEO Tobi Skovron. “We’ve always aimed to make people feel comfortable and homely rather than like they’re a sardine in a box.”

Workplace strategy revised

Internationally, the story is similarly varied: JP Morgan is warning demand for coworking sites is likely to evaporate during COVID-19, although sub-leasing could benefit. Meanwhile, some coworking operators are seeing rising demand for space led by major corporates suddenly relocating key finance teams to their sites rather than WFH.

As for the future, analysts see the outbreak stimulating demand for flexible space. “As an alternative to a company-wide remote working policy, companies are also physically segregating teams between the office, alternative work sites, or from home to minimise the risk of infection between teams,” states Knight Frank’s newly released report into how COVID-19 is reshaping workplace strategy.

 “While the demand for flexible space has already seen an increasing trend, this outbreak may spur more companies to consider having back-up offices to segregate teams for business continuity purposes.”

Although the outbreak will have caused many companies to delay their expansion and relocation plans, this was now the chance for corporate real estate heads to restructure risk management strategy in case of similar future scenarios.

 “In affected cities, we expect landlords will quickly become aware of the need to meet the market with more flexible deals in terms of tenure, fit-out and rental concessions to secure renewals and ensure longer-term retention,” the Knight Frank report states. “Given that the COVID-19 situation is still developing, now may be the best time to negotiate short-term lease extensions or greater flexibility.”

WFH will reshape the role of the office, Knight Frank analysts say. “A greater shift to remote working in the long-run won’t spell the death of the physical office,” said Dr Lee Elliott, Knight Frank’s global head of occupier research. “Rather the office will play an increasingly important role in bringing teams together to collaborate and establish company culture in a way that can’t be done virtually.”