5 signs your business should switch to an agile real estate model

Businesses of all sizes should consider an alternative to the ten-year lease.

Eighty-one percent of executives consider agility to be the most important characteristic of a successful organization, according to Forbes. Agile companies and teams can innovate faster, capture new market opportunities, and mitigate uncertainty. 

But traditional real estate models, with their long-lease terms and capital requirements, can sometimes inhibit business agility. As companies have recognized that in recent years, the market for agile real estate has exploded, and it’s continuing to grow. According to CBRE, flexible space in the top ten markets grew by 25% in 2018 alone.

So what is agile real estate?

Let’s start with what it’s not: moving your team into hot desks in a coworking space. Flexible office space solutions have been around for the better part of three decades, but the coworking boom has brought a new level of experience and scale to the game. The principle is the same: a business can access just the right amount of space for their needs, but today those businesses—and the office spaces—are much bigger. At WeWork, over one-third of Fortune 500 companies are taking advantage of our agile workspace solutions.

Agile real estate delivers an office space with much more flexible lease terms and all-in-one design, build, operations, and support. The WeWork platform offers thousands of move-in ready office spaces in hundreds of cities around the world for businesses of all sizes, from individual offices, to half-floors, to full floors.

What’s more, the principles of agility can be applied to entire buildings. At WeWork, we co-source and manage prime assets for some of our largest members, so they can flex into and out of the space as their business needs change, and monetize the unused space in the interim. If they need three floors now and the rest of the building later, they can grow into the space without taking a hit to their balance sheet.

Agile real estate gives businesses of all sizes the ability to match their real estate precisely to their needs, so they can move faster and invest where it matters, all while providing a great experience for their people.

How to tell if an agile real estate model is right for your company

1. You’re growing (or shrinking) unpredictably

Perhaps your company is in hypergrowth mode. You can’t project beyond next year how many people you’ll hire, but you know you’ll need a lot. Or maybe your business is considering downsizing to stay profitable. Or possibly you’re taking some big bets and want to bring in a supplementary workforce for an unknown period of time.

Whatever the scenario, the thought of making a costly, long-term commitment like signing a lease for the next decade may be unsettling. It’s a common concern: The average headcount planning cycle in the U.S is two years, and organizations large and small are experiencing levels of volatility like never before. 

With agile real estate, you can scale your workspace up and down as your business needs change, so that you’re not burning your investment and your employees have the right amount of space to be productive and fulfilled.

Bedding brand Brooklinen began in Vicki and Rich Fulop’s living room—and business started booming quickly. They came to WeWork because they knew they’d need space to grow, but the trajectory wasn’t yet certain. “We didn’t know what the future held for us, so we wanted a workspace that was extremely flexible,” says Rich. Brooklinen has since grown from two to 32 employees, and their space has grown with them—they expanded from one small office to a half-floor in the same building they started in, WeWork Dumbo Heights

With WeWork, Fulop explains, “you can move offices, lease another office, take out a wall. WeWork will let you grow with your team.”

2. You’re making important investment decisions

So you just secured another round of capital. Congratulations—now the real work begins. Where and how will you invest for maximum impact? If you’re planning to grow your talent base, you’ll need more office space, but the traditional route requires a significant capital outlay, which will eat into your other investment priorities. 

Agile real estate solves this problem. WeWork amortizes the standard fit-out contribution over our long-term leases, charging members only for the time they occupy the space. This means you can access beautifully-designed space without the capital exposure. 

Operating an office can also come with many unforeseen costs. A broken HVAC system or a plumbing disaster can throw off even the most careful forecast, not to mention cause headaches for your teams. Agile offices combine all property costs, operational expenses, amortized capital improvements, and management fees into one predictable monthly fee, bringing more certainty to your forecasts and making your teams’ lives a little easier.

3. You want to test a new market

You know it’s time to expand your horizons, and you have your sights set on a new market. All the signs are positive: you have a growing and satisfied customer base, you’ve identified unmet demand, and you even have some key leaders who are willing to relocate and build teams. But it’s not a sure thing—it’s never a sure thing—and you want to do everything you can to mitigate risk. 

In this scenario, a traditional lease is a risky option. When you combine the long-term commitment, the capital outlay and the time and effort required to set up a new office in a new location, it becomes a very costly experiment indeed. The challenge is magnified when you’re considering expanding internationally. 

Agile real estate is the prudent option here. Instead of locking your organization into a long lease commitment and a costly and time-consuming buildout, securing an agile space for your teams allows them to get up and running quickly. And because agile workspace scales on demand, you can start with a small amount of space and scale up as your satellite business grows.

When social media management platform Hootsuite began to expand internationally, they knew that change would be the only constant. Hootsuite needed a flexible real estate solution that could scale with them all over the world. The company utilized the WeWork platform to establish regional headquarters in major cities such as New York, Sydney, London, Hamburg, Paris, Mexico City, and Toronto.

“WeWork allows us to plan for the future,” said Nicole Quinn, executive assistant to the general manager at Hootsuite. “It’s very easy to scale up or scale down, depending on our needs. It makes things very simple for us.”

4. You need to tap into a new pool of talent

You’re desperate for developers, but you don’t want to pay the Bay Area price tag. Your new VP of Sales wants to build a squad in Denver. In recent years, the talent landscape has shifted, and cohorts of tech, creative and commercial superstars are fleeing the expensive coastal hubs and cropping up in new cities around the country and around the world. This is great news for your talent strategy and your bottom line… provided you can stand up offices there, too. 

Adding agile offices into your portfolio is a quick way to turn your business into a talent magnet. WeWork member TripActions, whose HQ is in the Bay Area, came to WeWork to see if a San Francisco satellite office could help them recruit city-based talent. It worked. They’ve since grown their employee base 10x, leveraging WeWork’s platform of agile offices to expand to cities as far flung as London, Amsterdam and Sydney. “WeWork has enabled us to hire great talent that we otherwise wouldn’t have been able to,” says Tammi Yee, vice president of global talent at TripActions. “Instead of being siloed in our Palo Alto headquarters, we now recruit the very best talent in cities all over the globe.”

5. Your employees are demanding more flexibility

Your most dependable closer is always on the move—around his region and across the country. Your very best lawyer needs to be close to home on Tuesdays and Thursdays. Your wunderkind developer weaves magic with code, but only between the hours of 8pm and 3am. You’ve heard rumblings among the staff that the commute is a drag, especially on Fridays. 

Across job functions and industries, today’s top talent want to work on their terms—where, when and how they like. Seventy-two percent of talent professionals agree that workplace flexibility is extremely important in shaping the future of recruiting and talent, according to LinkedIn. The tyranny of distance is real, and keeping remote and distributed teams engaged and productive can be a challenge. If you’ve ever tried to close a deal in a coffee shop or write a thoughtful performance review in an airport lounge, you’ll have felt the difference between “working remotely” and being in a workspace that’s intentionally designed for productivity.

Agile real estate allows your teams the space they need to do their best work and live their best lives. WeWork members are part of a network of 700+ beautiful, reliable workspaces in every major business city worldwide—and their employees have one-swipe access to reliable, on-demand workspace anywhere they are in the world. 

When Microsoft wanted to give their New York sales team maximum flexibility, they gave them access to all of WeWork’s locations in Manhattan, Brooklyn, and Queens. This helped them be close to their customers without losing productivity: 84 percent of them believe access to WeWork makes them more productive during their workday. The arrangement is having a positive effect on retention, too. “We want to grow our people, and give them a chance to work on problems that have impact and change the world,” says Matt Donovan, a Microsoft general manager. “I think solutions like this are another way to keep our best people.”

At WeWork, we believe that real estate should be a tool to drive your business forward, not a constraint that holds it back. 

Get in touch to learn more about our agile real estate solutions.