Space as a Service: The Flexible Future of Workplaces

The corporate office landscape is undergoing a major change as companies embrace a new model known as "Space as a Service" (SPaaS). Under this model, businesses utilize shared workspaces and flexible rental arrangements rather than traditional multi-year leases. The SPaaS model offers tremendous advantages for companies looking to reduce real estate costs while enhancing employee productivity and satisfaction. In this article, we’ll explore the explosive growth projections for this industry and why SPaaS represents the workplace of the future.

What is Space as a Service?

Space as a Service essentially allows companies to pay a subscription fee to an operator like WeWork to utilize shared office spaces on-demand. This means businesses can scale up or down more easily as needs change, while service providers handle office design, layouts, amenities and infrastructure. It‘s an "as-needed" approach rather than owning or leasing for long periods.

Employees also benefit from more flexible work arrangements enabled by SPaaS, such as working from home part of the time while still having access to a professional office environment on other days. The nature of work is changing, and shared workspaces are designed to facilitate collaboration and mobility.

Surging Demand for Flexible Spaces

The SPaaS model has rapidly gained adoption across companies of all sizes as cultural and technological changes transform workplace needs:

• Global flexible space is expected to expand to $275 billion by 2030, representing over 15% of total commercial space inventory according to real estate services firm JLL.
• 72% of large companies plan to leverage flex office space over the next 3 years according to researcher SpaceIQ.
• By 2030, flexspace could represent 30% of all U.S. office inventory.

From cost savings to employee retention to business agility, the rationale driving SPaaS growth is compelling across industries:

Key Benefits Accelerating Adoption Rates

There are many reasons why Space as a Service growth is accelerating across all sizes of organizations:

1. Cost Savings

SPaaS provides tremendous cost efficiencies compared to traditional office leases by reducing unused real estate – businesses only pay for the space they need. Provider WeWork estimates most members save 10-50% compared to conventional offices through optimized desk sharing ratios and fluctuating team sizes.

Specialized SPaaS storage providers like Clutter also offer big savings by focusing on logistics automation. They can match pricing from established players while offering greater flexibility.

Figure 1 – SPaaS providers leverage data analytics to optimize space utilization and drive cost efficiencies

2. Access to Premium Spaces & Locations

Flexible workspace arrangements allow companies to establish offices in prime locations like downtown skyscrapers that carry exorbitant purchase prices or long-term leases. Shared workspaces feature beautiful designs and high-end amenities exceeding budgets for traditional company offices.

SPaaS makes desirable central business district offices affordable even for new startups, supporting innovation. Wider location choices also aid companies securing diverse talent by situating offices convenient to where workers live.

3. Enhanced Employee Experience

Extensive research shows thoughtfully designed, engaging workspaces provide a significant boost in job satisfaction, productivity and team collaboration. Open, naturally lit spaces common in SPaaS offices promote better experiences than cramped private rooms.

In a recent Workplace Genome project survey, over 80% of respondents felt better supported by SPaaS environments. Younger generations also favor the flexibility and mobility supported by these new models.

4. Business Agility

The ability to dynamically scale teams up or down is invaluable given economic volatility and market changes companies face. Long conventional leases carry change fees and make rightsizing painful. Streamlined digital processes securing new SPaaS offices enables business agility.

On average, companies renting flex space can setup a new location 66% faster than traditional spaces. Meeting changing business needs is where SPaaS shines.

Forbes Technology Council member Nick Yates confirms, “we’ve found that our energy, morale and collaborative workflows have improved remarkably in flex spaces compared to regular offices.”

Major Players in the SPaaS Ecosystem

The SPaaS marketplace features specialty providers tailored to different industry needs as well as global operators:

WeWork remains the most widely recognized brand in shared workspaces, leasing over 1 million square feet per month across 700+ locations globally. From private offices to custom HQ buildouts hosting thousands, WeWork managed 5 million square feet of flex space leases just last year.

IWG owns numerous flexspace brands including Regus and Spaces, operating over 3,500 global locations. IWG reported 16% revenue growth in its most recent earnings call as demand surges.

Airbnb expanded beyond hospitality into beautiful boutique Airbnb Office spaces in select major cities, with discount membership plans available. While small, this segment has double digit expansion plans to meet demand.

Storage specific players like Clutter provide flexible pricing tiers to store belongings while remodeling offices or transitioning to hybrid workplace models. By optimizing logistics automation, Clutter offers savings matching larger players.

We also see partnerships with property developers who devote portions of new buildings to flex space suites to attract tenants from cutting edge industries. Landlords recognize SPaaS delivering value distinct from conventional offices.

Economic Trends Fueling Massive SPaaS Growth

Several cultural and technological evolutions occurring simultaneously are making SPaaS adoption accelerate exponentially:

1. Remote Work Momentum

As video meetings, cloud computing and device mobility enable effective remote work, employees no longer need to be stationed in central HQ offices at all times. Studies show over 25% of all full time employees will have remote work opportunities in the next 2-3 years.

But most employees still crave access to professional workspaces for collaboration, mentorship and division from home life. Thus companies are rethinking physical footprint needs.

2. War for Talent

Younger generations now make up the majority of the workforce – what Deloitte deemed “Generation Flex” in a 2022 workplace report. These workers prioritize the flexibility, collaboration-friendly culture, and amenity rich environments SPaaS fosters.

With so many employment options, top candidates gravitate to companies providing the working models matching their lifestyles and preferences.

3. Re-Inventing Cities

Early SPaaS spaces serviced mainly entrepreneurs and startups looking for community. But the pandemic radically accelerated adoption of flex models across enterprises, municipal planners and real estate developers.

Many cities now encourage projects with flexspace given contingent workforce growth, as these spaces promote innovation and economic activity. Shared spaces contribute to flourishing urban ecosystems that attract residents.

4. Real Estate Under Pressure

While occupier demand is stronger than ever in premium real estate markets, macroeconomic volatility has squeezed funding. Many companies don’t want to commit to 20 year mortgages yet still need space.

Developers face lending slowdowns for new construction. SPaaS bridges this gap between demand and capital, unlocking value for asset owners. Repurposing buildings by incorporating shared spaces serves all constituents.

The Future of SPaaS: Customization at Scale

The flexible future of work and living will be built on shared spaces. But generic coworking will give way to custom spaces aligned to brand identities and security needs even as enterprises adopt SPaaS models.

WeWork plans major investment in developing out dedicated campuses for its enterprise clients. Airbnb offers professional interior design services to ensure its listings reflect users’ desired aesthetics.

SPaaS platforms are leveraging technologies like VR/AR so companies can envision custom buildouts prior to move-in. Workspace reservation and access control apps ensure optimal utilization and security.

Integrating flex principles across corporate portfolios – both owned and leased properties – will dominate commercial real estate strategies. Deloitte predicts 70% of companies will commit to enterprise partnerships with flex providers by 2025, designating entire buildings or floors for their workforce.

Sprinkling of flexspace is not enough. True SPaaS integration means reconceiving how spaces promote productivity, innovation, and connectivity.

Final Thoughts

The workspace is undergoing a digital transformation: flexible, adjustable, optimized to user needs. Just as streaming displaced DVDs and ride sharing disrupted taxis, SPaaS represents the future of where we create value.

Employees need spaces promoting focus, collaboration and convenience within environments that inspire. Enterprise leaders recognize attracting top talent and enabling innovation requires the latest tools and settings.

SPaaS checks every box on functionality while driving cost efficiencies and supporting growth. The companies that embrace flexible workplaces will gain advantage in the war for talent and marketplace battles to come.