The cost of fitting out an office space is rising. This reality is pushing more and more businesses to rethink traditional leases and embrace the flex space model. As Peter McNamara (Union Investment Real Estate GmbH) said at our recent event with Trustek, for both landlords and occupiers, “the cost of fitting out space is huge”. Our conversation followed on from this and ranged from strategy to the nuts and bolts of real estate investment, how much it costs to get a workspace up and running, and who should carry that burden.
Long-term leases used to be the norm, but they often come with a hefty upfront investment. Beyond rent, occupiers face significant capex for fit outs. Everything from furniture and technology to branding and break-out spaces comes at an extra cost. Landlords and tenants alike are now questioning whether it makes sense to sink large sums of capital into a space that may not suit their needs in just a few years’ time. Tom Cazalet (Hines UK) summed it up well: “People are shocked when they see the true cost of a fit-out. The ability to grow a team on a short-term basis is more important than ever.”
Flexible workspaces offer a practical solution. With flex, businesses can scale up or down without being tied to expensive, fixed assets. Flex allows landlords and occupiers to access ready-to-go spaces with minimal upfront investment. This is especially valuable with a market where growth can be rapid but uncertain. Bex Moorhouse (Work Reconstructed) noted, “When businesses are presented with the option of spending on real estate or AI, they choose AI. No one wants to sink money into a building that isn’t theirs.”
One of the key advantages of flex is its adaptable financial model. Flex allows for tailored solutions that meet the needs of both landlords and occupiers, rather than a one-size-fits-all approach. Whether that be all-inclusive pricing for an occupier or shared amenity investment for a landlord, flex offers financial solutions that aren’t always possible with traditional leases. Moorhouse highlighted that tight budgets are the new normal, and finance models need to be nimble.
For landlords, the flex model means less exposure to upfront capital expenditure. Instead of investing heavily in speculative fit-outs, landlords can provide basic, adaptable spaces and let flex operators or tenants tailor them as needed. This approach reduces risk and ensures that spaces remain relevant and in demand.
Work life is changing, and the days of “build it and they will come” are over. Soaring fit out costs and the risks of long-term leases are making flexible workspaces the smarter choice for many scaling teams. Flex offers a way to support growth, manage costs, and stay agile in a fast-moving market.
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