The Instant Group's North America Flex Review Found NYC and Boston are the Most Expensive Cities for Flexible Workspace
Across the North America flexible office market, meeting room booking demand was up 27 percent between 2021 and 2022, flex contract lengths have increased by 40 percent and average occupier size has increased by 19 percent (2023 vs. pre-pandemic)
NEW YORK, June 23, 2023 /PRNewswire/ -- A flexible workspace supply/demand imbalance has created pinch points for cities across North America, according to The Instant Group's new report, "Beyond The Traditional Office: Trends and Insights in North America's Flexible Workspace Market." For example, in cities where demand for flex has been slower to recover but where new supply is cropping up, this imbalance is creating favorable markets for occupiers.
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Such cities include Denver, Atlanta, and Dallas, and all currently present an opportunity to acquire flex space at a competitive price:
- In Denver, demand dropped 8 percent, but supply grew 3 percent. This oversupply caused rates to drop five percent.
- Atlanta demand increased 7 percent and supply increased 11 percent. The market's rate drop of one percent is due supply exceeding demand.
- In Dallas, demand dropped 3 percent while supply grew 5 percent. Accordingly, rates are down three percent.
In the Canadian markets analyzed, demand is far outstripping supply. In Mexico City, supply is keeping pace with high demand growth.
- In Toronto, demand is up 46 percent while supply is up seven percent. Rates increased one percent.
- In Vancouver, demand is up 95 percent while supply growth is up four percent, and rates increased two percent.
- In Montreal, demand is up 67 percent, while supply is up three percent. Rates increased five percent.
- In Mexico City, demand is up 241 percent, while supply is up 11 percent. Rates increased 11 percent as well.
All demand and supply data compares the last pre-pandemic year 2019 to 2022, and rate data compares January-April 2023 against 2022.
Demand for meeting room bookings is up 27 percent between 2021 and 2022 as collaboration becomes the main goal of the office and workspaces. Average contract lengths in the flexible workspace sector have increased by 40 percent in 2023 compared to pre-pandemic, while average occupier size has increased 19 percent over the same period.
"Meeting room and occupier size data supports what we also see anecdotally through our work, that occupiers are evolving their use of flexible space to be more strategic in providing different options to their employees aligned to how they need to use space – focus time, collaboration spaces, and project team space in various geographies," said Emily Watkins, Chief Client Officer, Americas, The Instant Group.
Across North America, demand for flexible offices dipped one percent in Q1 2023 over Q4 2022 after the surge in demand throughout 2022 which saw demand levels 57 percent above those seen pre-pandemic (2019).
CITY BY CITY TRENDS AND RATES
New York City
New York City is the most expensive city in North America for flexible workspace with an average desk rate of $898 per month. Although traditional office recovery has been slow in the city, demand for flex space remained above pre-pandemic levels for the fourth quarter in Q1 2023, up 11 percent from Q4 2022, a quarter that dipped slightly below pre-pandemic levels.
New York City is also experiencing a shift in occupier profile, with average term lengths up 33 percent in 2023 compared to 2019, whereas traditional offices are seeing term lengths decline. Average occupier size for flexible workspace in NYC is up 14 percent over the same period. In 2023 to date, a quarter of all flex clients are occupying spaces of 25+ desks.
"Despite some troubling headlines in the traditional office space sector in New York City, we are actually seeing strength in the New York City flex market, as corporate occupiers get on board with flexible workspaces to increase agility within their real estate portfolios," said Michael Calistri, director – solutions development, The Instant Group.
METHODOLOGY
Data within the report is compiled via The Instant Group's leading flexible workspace data platform Instant Insight. Rate data is based on transacted rates providing the most accurate view available within the industry, while demand data is based on demand coming through The Instant Group's leading digital platform Instant Offices.
About The Instant Group
The Instant Group has been rethinking workspace since 1999 with over 500 experts working globally across more than 175 countries. Instant's digital platforms constitute the world's largest digital marketplace for flexible workspace listing meeting rooms, virtual offices, flexible office space and coworking memberships. Its global team advises on commercial real estate solutions from serviced offices to fully customized managed offices, and consulting services for portfolio and net zero strategies. Instant's approach enables agility, hybrid working solutions and improved operational resilience for more than 250,000 businesses every year. Clients include Prudential, Booking.com, Shell, Jaguar Land Rover and GSK. Instant has global offices including London, Paris, New York, Hong Kong, Singapore and Sydney.
www.theinstantgroup.com
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SOURCE The Instant Group
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