by Alan Pepper, CEO Orega

The flexible workspace sector looks to continue its expansion into 2026, building on sustained demand from existing occupiers and a growing cohort of organisations choosing to exit traditional leasehold arrangements altogether. What was once viewed as a tactical, short-term solution is now firmly embedded in corporate real estate strategies — and the forces driving this shift are unlikely to reverse.

Occupier Demand in Uncertain Times

While demand for high-quality conventional office space remains resilient — often outstripping supply — this same dynamic is being mirrored in the flexible workspace market. Existing flex occupiers continue to value the inherent adaptability the model provides, using flexibility as a lever to manage hiring decisions, mitigate risk and support lower-commitment business expansion.

Economic volatility, lingering uncertainty following the recent Budget, and an ever-evolving legislative environment are all reinforcing this behaviour. For organisations unsure of their future space requirements, flex represents a logical response: space that can be scaled up or down as needed, without long-term financial exposure.

We also expect the trend observed throughout 2025 — corporates exiting conventional leases at end of term and transitioning into flex — to continue. This is particularly evident among mid-sized corporates, many of whom are prioritising operational efficiency, outsourcing property management, and retaining optionality around their occupational footprint. Flex allows these businesses to remain agile while maintaining high-quality working environments.

That said, the market is not without short-term challenges. In certain locations, the volume of conventional space available currently exceeds that of flex, with landlords offering aggressively low rents to secure occupiers. In the near term, this may temper flex take-up in some submarkets, although we believe it will do little to undermine the longer-term structural shift underway.

Landlords Reassess the Role of Flex

As occupier demand continues to grow, landlords are increasingly evaluating whether flexible workspace solutions should form part of their buildings’ core offering. Outside of super-prime assets, most large offices — whether newly developed or comprehensively refurbished — will need to include some form of flex provision as standard.

For many landlords, the key question is execution: whether to partner with an experienced operator to manage the operational intensity of flex, or to develop in-house capabilities. This decision will be particularly pertinent as leases expire over the coming year and both landlords and corporate occupiers reassess their options in a more fluid occupational landscape.

Core Fundamentals Matter More Than Ever

With hybrid working patterns largely settled, businesses are becoming more decisive about their long-term working arrangements. As office attendance increases, companies are committing to space that supports collaboration, productivity and employee engagement.

As a result, the core fundamentals of location, amenity, workspace quality and transport connectivity are once again taking centre stage. While price remains a consideration, we expect these qualitative factors to increasingly outweigh cost — within reason — as occupiers focus on attracting talent and improving retention. This shift should underpin pricing growth across well-located, amenity-rich flex space in 2026.

Service quality will also be a differentiator. Operators that invest in experienced teams and consistently high service levels will be best placed to retain clients in an increasingly competitive market.

Alongside this, new product offerings will emerge to meet evolving client requirements and reinforce the value proposition of flex. Technology will play a growing role, particularly tools that provide detailed insights into space utilisation and operational efficiency. We expect wider adoption of AI-driven solutions in 2026, supporting both occupiers and operators in optimising how space is used.

Pricing Pressures Are Building

Cost pressures across the sector are set to intensify. From April 2026, a higher business rates multiplier will apply to larger properties with a rateable value of £500,000 or more. Combined with the risk of flexible workspaces being assessed as whole buildings rather than individual units, this will materially increase costs for operators.

The impact will be particularly acute for those accommodating small businesses and start-ups, who may no longer qualify for small business rates relief. In addition, operators that previously relied on empty property relief for individual vacant units will lose that protection.

Given that the sector has limited capacity to absorb further cost increases, these pressures are likely to be passed through to occupiers, resulting in price inflation across flexible workspace markets.

Regional Trends and the Rise of Managed Space

London will continue to lead demand. According to CBRE, flexible offices in the capital are expected to reach 50 million sq. ft by 2030, accounting for around 20% of the total office market, up from approximately 12% today.

Regionally, demand for flex is also accelerating, particularly where major corporates are establishing or expanding regional hubs. Cities such as Manchester, Birmingham and Leeds are seeing strong interest, especially from legal, professional and financial services firms testing new locations or scaling existing operations.

Alongside this, the managed space segment of the flex market will also continue to expand, particularly in London. Managed space offers longer terms than mainstream flex and more bespoke offers. It is increasingly attractive to landlords looking at cost effective ways of offering short lets where the building dynamics require it, for example if there are redevelopment plans or block dates to be taken into account. It will be increasingly important for both the operator and landlord to define their managed product to stand out to the consumer. Those who get it right will do well.

Looking Ahead

While 2026 is likely to bring continued geopolitical and political uncertainty, this volatility will only strengthen the case for flexible workspace. Businesses are increasingly focused on reducing long-term financial commitments and maintaining agility as they navigate an evolving regulatory and economic environment.

Flex is no longer a niche alternative — it is a core component of the modern office market. The challenge for operators and landlords alike will be to demonstrate genuine value, underpinned by service, quality and adaptability, in what is becoming an increasingly sophisticated sector.

This article appeared in CoStar on 5th Jan 2026.