The commercial real estate market may look different in post-recession Maryland. Between cutting costs during the recession and improving telecommuting options, small and large businesses saw employees move out of their cube farms and into their home offices. Now that business is picking up, albeit slowly, some business owners are finding that office space is an asset. Sometimes.
Rather than sign multiyear leases and bear the expense of a build-out, businesses are turning to flex space. A handful of companies in Annapolis are on the leading edge of the trend, offering businesses office space, training facilities, meeting rooms and amenities that can be added to or subtracted from the space on a moment's notice.
With so many configurations available, lease rates vary greatly, from as low as $59 to as much as $4,000. Lease terms depend on the tenant's needs, starting at one day and ending when the tenant feels the time is right. One woman says she has run her sole proprietorship out of her "temporary" space for two years. She sees no reason to change, she says, especially because the office offers her welcome relief from the isolation of working alone from home.
The idea is not new, but flex space was hard to come by during the recession. The market has improved over the past two years, according to market research company IBISWorld, and the trend should continue for the next few years. Right now, about 200 companies make up the $2 billion industry.
Economists and business analysts say that small businesses and startups will continue to drive the economic recovery. These businesses, especially the ones focused on intellectual property, are fairly fluid with their operations; they don't follow the usual growth patterns. The commercial real estate market has to adapt to the shift away from larger businesses and long-term tenancies. Flex space could be just what the new business model needs.
Source: Capital Gazette, "Being flexible: Annapolis firms move to temporary spaces," Shanteé Woodards, Sep. 24, 2013