What Is Flex Space in Commercial Real Estate? Definition & Examples.

What Is Flex Space in Commercial Real Estate? Definition & Examples.

Flex space is a term commonly used in the world of commercial real estate. But what exactly does it mean? In this article, I will provide a comprehensive definition of flex space and give you some examples to help you understand its significance in the industry.

Flex space refers to a type of commercial real estate that offers a versatile solution for businesses. Unlike traditional office spaces with fixed layouts and long-term leases, flex space combines elements of a warehouse, office, and retail space into a single property.

These flex spaces are typically large warehouse-style buildings that are designed to accommodate different business needs. They feature office spaces that are built-to-spec, allowing businesses to have a customized and functional workspace. Additionally, flex spaces offer shorter lease terms compared to traditional offices, giving businesses more flexibility in their operations.

The appeal of flex space lies in its adaptability. It caters to businesses that require efficient, cost-effective, and customizable real estate solutions. From e-commerce fulfillment centers and light manufacturing units to distribution and logistics companies, flex spaces can accommodate a wide range of industries and business types.

Key Takeaways:

• Flex space is a versatile solution in commercial real estate that combines warehouse, office, and retail space.
• Flex spaces are usually large warehouse-style buildings with built-to-spec office spaces.
• Flex spaces offer shorter lease terms compared to traditional offices.
• The flexibility and adaptability of flex spaces make them attractive to businesses seeking customized real estate solutions.
• Industries that can benefit from flex spaces include e-commerce, manufacturing, distribution, research and development, food and beverage, art studios, fitness centers, and auto repair shops.

Types of Flex Space and Their Benefits in Commercial Leasing

Flex spaces offer a variety of options to cater to different business needs and industries. Here are some common types of flex space and the benefits they bring to commercial leasing:

E-commerce Fulfillment Centers

E-commerce fulfillment centers provide storage and logistics infrastructure for online retailers. These spaces are designed to efficiently handle inventory management, order fulfillment, and shipping operations.

With the rise of online shopping, e-commerce fulfillment centers have become a crucial part of the supply chain. Their proximity to major transportation hubs and the ability to scale up or down based on demand make them an attractive choice for businesses in the e-commerce sector.

Light Manufacturing Units

Light manufacturing units are ideal for small-scale manufacturers and artisanal product creators. These spaces offer the necessary infrastructure for production processes, such as manufacturing equipment and storage space for raw materials and finished goods.

The flexible nature of these units allows businesses to adapt their workspace as their manufacturing needs evolve, making it a cost-effective option for businesses in the manufacturing industry.

Distribution and Logistics Spaces

Distribution and logistics companies benefit from flex spaces that provide storage and operational space required for managing supply chains. These spaces offer easy access for transportation vehicles, loading docks, and ample storage capacity.

With the ability to accommodate growing inventory volumes and seasonal fluctuations in demand, distribution and logistics spaces are essential for businesses in the logistics industry.

Research and Development Facilities

Flex spaces are commonly used as research and development facilities by technology and pharmaceutical companies. These spaces provide a conducive environment for innovation, collaboration, and experimentation.

The flexibility of the layout allows businesses to create specialized work areas, such as laboratories and design studios, to support research and development initiatives.

Other Business Uses

Flex spaces find applications in various other industries as well. For instance, they can be utilized as food and beverage production spaces, art studios, fitness centers, and auto repair and body shops. The customizable nature of flex spaces allows businesses to tailor the space to their specific needs, promoting efficiency and productivity.

Overall, the benefits of flex spaces in commercial leasing include scalability, cost-effectiveness, shared amenities, and the ability to easily customize the space to meet specific business requirements. Whether a business needs warehousing, manufacturing, research, or distribution space, flex spaces offer versatile solutions that cater to diverse industries and foster growth.

Investing in Flex Space: Why It’s a Lucrative Option in Commercial Real Estate

Flex space investment is rapidly gaining popularity in the commercial real estate market. As an investor, I am excited about the immense potential and attractive returns that come with investing in flex space.

Flex spaces offer a unique combination of versatility and adaptability, making them an ideal choice for a wide range of businesses and industries. This translates to a steady demand for flex space properties, ensuring a stable rental income stream that can provide a strong return on investment.

What makes investing in flex space even more appealing is its resilience during challenging times, such as the COVID-19 pandemic. The private access, customizable layouts, and low maintenance costs of flex spaces make them an attractive option for businesses looking for efficient and cost-effective solutions amidst uncertainty.

Furthermore, the triple net lease structure in flex space investment provides landlords with a stable income stream. With tenants taking responsibility for taxes, insurance, and common area maintenance, investors can enjoy a hassle-free and consistent cash flow.

Here are some examples of flex space in commercial real estate:

• Convertible office space – These are office spaces that can be easily converted between open floor plans and individual offices. The walls between spaces are movable to allow for reconfiguration. This allows companies to modify the space as their needs change.
• Industrial flex space – Industrial buildings designed with open floor plans that can accommodate a variety of uses like warehouses, distribution centers, light manufacturing, and research & development. The flexible design allows tenants to customize the space.
• Retail flex space – Retail spaces that can be adapted for different retail uses, like big box stores that can be subdivided for smaller tenants. Also includes spaces with movable walls/dividers for temporary pop-up shops.
• Coworking spaces – Shared office spaces that individuals or small groups can rent out. The flexible memberships and open layouts allow for a range of users.
• Maker spaces – Shared spaces with flexible workstations and communal equipment for prototyping and small-scale manufacturing. They provide flexibility for different maker operations.
• Medical flex space – Medical office spaces that can accommodate a variety of health services like urgent care clinics, doctor’s offices, dentists, and imaging centers. The generic design allows the space to be adapted.