As flexible workspaces become more widespread, a clearer valuation picture emerges
As the dominant type of flexible space solution today, coworking accounts for more than 25 million sq. ft. of space across the country’s 30 largest office markets. To determine whether flexible space impacts property values, CBRE analyzed data from recent sale transactions of office buildings that had at least 10% flexible space occupancy (flex transactions).
Most flex transactions have cap rates lower than national and market averages. This likely is because flex operators typically locate in active investment markets and in high-quality buildings. But relative to comparable transactions with no flexible space occupancy, flex transaction performance was more nuanced, especially in buildings with less than 40% flexible space occupancy.
While real estate fundamentals remain the main consideration for investment-sale transactions, widespread adoption of flexible workspaces is an increasingly relevant factor in asset valuation.