Analysts: redistribution of the office market after a pandemic is inevitable

In the declining market of Moscow office real estate, only the segment of flexible service offices is growing - its growth by the end of the year may reach 50%. The demand for the new format will lead to a redistribution of the entire office market, Space 1 analysts say.

A study conducted by this network of service offices showed that against the backdrop of a 20% decrease in the volume of purchased and leased office space in Moscow by 20% and a decrease in the commissioning of new facilities by at least 6%, the share of the so-called flexible office segment by the end of the year it will grow by 50% (from 1% to 1.5% of the market).

“The growth would have been 100%, if not for the coronavirus,” says Pavel Fedorov, CEO of Space 1. - But even in the current conditions, a general market decline will result in a redistribution of demand in favor of flexible offices. Their share will grow many times - precisely due to the huge influx into the segment of those tenants who are now abandoning classic rents. "

Flexible, or flex office, is a new format of office space that is completely ready to move in, quickly adaptable to the needs of the client (branding, layout) and surrender on flexible terms and conditions. The rental rate already includes furniture and equipment, cleaning services, reception and security, the Internet, consumables for the printer and other office expenses. At the same time, flex office is not coworking, but a full-fledged isolated office, designed for at least 30-50 employees, with all the necessary infrastructure - workspaces, meeting rooms, kitchens and recreation areas.

But if earlier this format was mainly demanded by IT and telecom companies, banks and project teams, then after the pandemic began, retail, near-state, manufacturing and FMCG companies also became interested in flexible offices. The quality of requests has also changed, says Pavel Fedorov: if earlier 15–20 applications were received per month for flexible offices, often just to get acquainted with the format for the future, then in March – April there will already be 10–15 specific requests for moving to flex format .

Requests were corrected and substantively: in the ToR for flexible offices the number of permanent jobs is reduced. Those who requested 100 permanent places at the beginning of the year now request 80 permanent + 20 for temporary work, hotdesking zones have become mandatory; the demand for meeting rooms, booths for telephone conversations increased, requirements for high-grade equipment for video conferencing were added. The average term of a potential lease has also changed: if before the company was interested in the possibility of withdrawing from the contract in 18-24 + months, now it is 12+ months, while for the greater freedom of “maneuver in time” companies are ready to pay + 10-15% to the rate).

“Two categories of companies are interested in flexible offices,” explains Pavel Fedorov. - The first is departments or business units of large companies that are growing rapidly. These are most often IT departments or units associated with new products for the company. They have certain requirements for jobs, primarily the safety and comfort of employees. And they get a full-fledged closed, professionally serviced office with the possibility of expansion in the event of their further growth in the horizon of 2-3 years. However, they do not need to spend money on repairs, equipment and furniture. The second category is medium-sized companies with a staff of 50-150 people who have grown and decide which is more profitable: “lay down” for 4-5 years - rent an office “in concrete”, spend several tens of millions to repair it “for themselves” and in six months move into it - or sit down in a flexible office tomorrow, ready, customized and branded for them. Most choose the second option, it is easier and less risky than taking a significant amount of money out of circulation, which is now much less predictable".