With a year as unpredictable as 2020, it should come as no surprise that flex space is growing in popularity. Flexibility has been the key to good business strategies this year, and flexible space has been one of the keys to commercial real estate (CRE) strategies as well. In addition to the current demand for this type of CRE, flex space has several other benefits to offer.
What Is Flex Space
As its name suggests, flex space is a facility (usually industrial) that can serve multiple functions. It can facilitate anything from manufacturing to retail showrooms. Generally, 25% or more of the building contains office buildout, and as a result, flex space has a higher parking ratio than other industrial buildings.
Warehouse and Distribution Flex Space
The pandemic and subsequent shutdowns caused an increase in online shopping. Many companies had to pivot their business practices to include more shipping or delivery options than in-person shopping experiences. One source suggests that virtual shopping will cause a demand for 1 billion more square feet of industrial space by 2025. The Wall Street Journal reports that the online shopping trend, even for groceries, will stick around, and companies will begin storing back-up stock to keep up. And according to JLL, cold-storage facilities alone need 100 million square feet in order to maintain the pace of sales trends. But the industrial and retail sectors are not the only ones that can take full advantage of flex space.
Flex Space in the Medical Sector
In early 2020, various types of CRE transformed into makeshift flex spaces, making room to host pop-up medical facilities. Convention center hallways housed patient beds, and empty corporate offices became storage spaces for medical supplies. The need for actual flex space in the medical sector was extraordinarily evident.
Prior to the pandemic, the demand for medical real estate was already on the rise. An aging baby boomer generation and the relatively recent change in healthcare legislation created a significant need for medical space. But lack of available hospital space amid the early wave of COVID-19 created a general awareness of the necessity of more space within the niche medical sector.
Flex Space Uses in the Medical Sector
Flex space poses a unique solution for a variety of medical needs. And while there are numerous opportunities for medical groups to use flex space, here are a few basic benefits that flex space has to offer:
Research and Development
In 2018, the medical industry ranked second place in the list of industries that spent the most money on research and development. In recent years, medical researchers have been working with robotics, virtual reality, genomic medicine, etc. in their treatment plans. Because flex spaces are easily adaptable, it offers the ideal area for medical and (or) technological studies.
Offices
One source explains that for every hour that a physician spends with patients, they spend another two hours on desk work or reporting. But treating patients around the clock can leave little to no dedicated office time. Facilities that host multiple doctors and a large patient base might benefit from flex spaces. Rather than reserving individually assigned offices that may be empty the majority of the day, the facility can offer a shared, general office space.
Procedures
A medical group may want to use their flex space to facilitate a variety of procedures throughout the day. The medical group could ensure that the room has all of the basic procedural elements and determine which simple treatments they can perform within the same space.
Flex spaces can serve creative purposes for businesses and medical practices. An experienced advisor would be able to offer insights into how to maintain, update, or add value to flex spaces over time. For additional questions or details on how a flex space could benefit individual businesses or medical real estate tenants or owners, reach out to the HBRE team.
If you are interested in learning more about investing in commercial real estate, or if you have questions about buying, selling, or leasing a commercial property, please contact an HBRE advisor. Our team of experienced CRE professionals have the skills and insight to assist with all property transactions. To reach out to us directly, email [email protected] or call 615-564-4133.
