Flexible office space set to rise in 2025: Cushman & Wakefield

Demand for flexible office and coworking spaces is projected to increase in 2025 as companies continue to prioritize location and schedule flexibility for their workforces. According to a report from Cushman & Wakefield, this growth is being driven by evolving work preferences and a strategic shift by landlords toward self-managed flex brands to diversify their portfolios. This trend is particularly significant for the sector as it highlights a shift in inventory away from traditional gateway markets toward secondary and tertiary regions.

The flexible office sector is poised for continued momentum in 2025, fueled by technological advancements and the ongoing reimagining of urban environments. While some organizations are mandating a full return to traditional offices, many others are leaning into coworking models to provide employees with the socialization and collaboration opportunities they seek. Cushman & Wakefield reports that operators are pursuing diverse expansion strategies, including portfolio enhancements and landlord-led initiatives where building owners develop their own flex brands to access a broader pool of potential tenants.

Market data from Q3 2024 reveals a notable geographical shift in coworking inventory, with secondary markets now accounting for the largest share at 47%, up from 45% the previous year. Conversely, gateway markets like New York City, Boston, Chicago, Los Angeles, and Washington, D.C., saw their share dip from 45% to 43% during the same period. Tertiary markets, though representing only 10% of total inventory, experienced a significant 20% aggregate year-over-year growth in their footprints, signaling a clear decentralization of the flexible workspace landscape.

Specific regional highlights include New Jersey, which saw its coworking inventory grow by 36% year-over-year, reflecting strong demand in major suburban markets near New York. Other high-growth areas include Indianapolis and Nashville, which saw inventory increases of 40% and 35%, respectively. Looking ahead to 2025, Cushman & Wakefield anticipates that providers will make opportunistic plays, such as acquiring smaller firms in select markets to further expand their reach and inventory while collaborating with partners to operate these spaces effectively.

The rise of flexible workspace is also being framed as a critical component of urban revitalization efforts aimed at rebalancing live-work-play environments. By offering spaces that specifically cater to the collaborative needs of modern employees, flex offices are becoming a central tool for stakeholders looking to breathe new life into city centers. This evolution suggests that the sector will remain at the forefront of workplace strategy as landlords and operators adapt to meet the changing demands of the global workforce.