- Office space take-up by flex office operators at 56,000 sq m in 2023
- Slight net decline in flex stock likely for 2024
- 78,000 sq m of new flex office space in planning
- Berlin remains the largest flex office location
- Trend towards management agreements intensifies
In a recent analysis, Cushman & Wakefield (C&W), one of the world's largest real estate consultancies, examined the flex office markets in Germany's top 7 cities. The results are based on data from almost 260 operators who manage a total area of around 1.1 million sq m in more than 600 locations. They can be divided into traditional business centre operators, coworking space operators and hybrid providers, which offer a combination of private offices and workstations in open spaces. The latter category includes large companies such as Design Offices, wework, mindspace and Spaces.
In 2023, flex office operators achieved office space take-up of 56,000 sq m, which corresponded to 2.7 per cent of total take-up. During this period, 27 new locations were opened and 15 closed. The openings in the past year totalled around 55,000 sq m, while closures accounted for around 50,000 sqm.
In the first quarter of 2024, operators opened flex spaces at seven new locations covering 13,000 square metres. At the same time, 51,000 sq m were closed at 22 locations. This year could see a slight net reduction in the flex stock for the first time, as closures of 60,000 square metres have already taken place or are planned for the current year. Closures that have not yet been published could still be added. The biggest wave of closures is among hybrid operators, which generally have the largest locations in terms of space. The total openings for 2024 amount to around 57,000 sq m.
‘Openings and closures are a regular part of the flex office market. The largest increases took place in 2018 and 2019 with almost 200,000 square metres each. Since the beginning of the coronavirus crisis, there has been an increase in closures, with a peak of around 120,000 square metres in 2021,’ says Tina Reuter, Head of Germany at C&W, assessing the figures.
Helge Zahrnt, Head of Research & Insight Germany at C&W, adds: ‘In addition to the usual relocations in the course of location optimisations, several locations were closed in 2023 and 2024 due to the insolvencies of operators such as rent24 and workrepublic. Some of these locations are being taken over by competitors, but some are still being wound up.’
Future developments and plans
There are currently 78,000 sq m of new flex office space in planning, spread across 39 locations. In the period between Q2 and Q4 2024 alone, 38,000 sq m are planned to be opened at 24 locations. These figures show that investment in new locations is continuing despite the slight net decline in the portfolio.
Largest stores and operators
Berlin remains the flex office capital in Germany with a combination of existing and planned locations totalling around 330,000 sq m. It is followed by Munich (around 242,000 sq m) and Frankfurt (around 150,000 sq m). The largest operators in terms of space in the top 7 markets are Design Offices, Regus, wework, mindspace and Spaces, with Regus having the most locations.
Economic conditions and price trends
The prices for the various workspace options in flex offices vary significantly in spring 2024. The average asking price for hot seats is EUR 245, for fixed seats EUR 350 and for a workspace in a private office EUR 450. For some providers, the prices for private offices are over €1,000, reflecting the considerable qualitative differences between the locations and concepts.
Market trends and user behaviour
‘The German flex office market remains attractive, despite a structural change in demand in which office users are increasingly favouring smaller spaces with higher quality, which is reflected in their willingness to pay higher rents. These offices are primarily in high-quality locations and offer flexible utilisation options that can serve as both temporary and permanent solutions,’ explains Helge Zahrnt.
Even against the backdrop of an uncertain economic situation and the mixed market outlook, which manifests itself in closures and insolvencies as well as openings and expansions, the market continues to adapt. The trend towards management agreements is particularly noteworthy here. These allow operators to act on behalf of property owners, often with variable revenue or profit shares and under both their own and third-party brands.
‘Despite economic challenges and the current market uncertainties, the German flex office market is showing remarkable resilience and continues to offer opportunities for growth and innovation. Developments in the coming months will be crucial in assessing the long-term prospects and potential of this dynamic market segment,’ summarises Tina Reuter.
