With the flexible workspace market at an inflexion point, what can operators and landlords expect in 2026?
London’s flexible workspace market is entering a defining chapter. After decades of rapid expansion to circa 7m sq. ft, and post-pandemic recalibration, the sector now sits at an inflexion point. G8’s Douglas Green examines the tension between operators providing serviced space and pushing for low-risk management agreements and property owners building their own flex and managed brands. Douglas reflects on the paths the sector could take as 2025 draws to a close and the market looks ahead to 2026.
CoStar analysis in late 2024 suggested that while the delivery of new flexible workspace in the UK had slowed to its weakest pace in several years, the outlook for 2026 points to stabilisation as occupier behaviour starts to normalise. This is set against a current background of occupier demand for sub-5,000 square foot fitted managed suites reaching record highs.
Have we reached saturation?
Central London remains the world’s most mature flex market with flexible space representing roughly 10% of total office stock. According to Rubberdesk, however, flexible workspace vacant stock in the UK increased by 32% year on year in Q1 2025, with London availability up as high as 39% year on year. London now has 141,448 vacant workstations, sitting in some 5,400 vacant office suites. While availability has risen, it reflects a market in transition rather than a structural decline. Demand for high-quality managed space remains strong, especially for top-tier products. London flex enquiries rose sharply in early 2025, and desk rates for high-end products have remained firm. It's clear that there is strong demand for ready-to-occupy space that supports hybrid work and avoids heavy capital expenditure.
This mixed picture raises the question of whether the sector has reached a tipping point. Yet the challenge ahead appears less about a lack of demand and more about where that demand originates and who is capturing it. Flex clearly remains the default for the vast majority of 1 to 15 desk requirements, while demand for high-quality managed space, particularly up to 5,000 square feet, has surged, creating a staggering year-on-year increase in availability by 111%. Savills’ recent research reinforces this shift, noting that corporates are embracing flex to improve agility, efficiency and talent retention, which will continue to underpin the sector in 2026. Workthere’s fifth Flexmark operator survey confirms this, showing that corporates now represent 47% of global flex office occupancy, up from 13% in 2020. For property owners, investors and operators alike, the question is no longer whether flex belongs in the market but how it should be delivered and by whom.
The evolution of management agreements
A few years ago, management agreements and turnover/profit share leases were hailed as the future. They accounted for over 40% of new flex deals in 2024, up from less than 10% before the pandemic. That sounded like alignment at last between landlords and operators.
But today, there is more hesitation. Some owners say operators are not delivering the returns they were promised and, more pertinently, that agreements need to be more aligned with the risk/return model that owners are often required to commit to under these structures. Others prefer to control delivery themselves, meeting demand for managed space from larger corporates that require less hands-on management.
This marks the first clear sign of the inflexion point: operators seeking lower-risk agreements just as owners invest in their own flexible products.
The rise of the ‘brandlords’
The big picture is that the traditional property companies are no longer sitting on the sidelines. Landsec’s MYO, British Land’s Storey, Canary Wharf Group’s MadeFor and Great Portland Estates’ flexible projects are not experiments anymore. They are full-blown brands with serious investment and great sustainability credentials, and they are here to stay.
More and more larger occupiers are gravitating towards these ‘brandlords’ for a number of reasons: their ability to deliver product to the market with speed, competitive edge with ownership at its core and, of course, long-term security. If you are a law firm signing up for a 5,000-plus-square-foot licence, dealing directly with a FTSE‑listed REIT may feel safer than perhaps a private operator. That covenant comfort counts. And because these owners can also invest heavily in fit-out, design, and service, they are raising the bar for everyone else. Combined with operators’ retreat into low‑risk deals, this expansion means the market model cannot hold indefinitely. Something has to give.
Consolidation on the horizon
A divide is emerging between operators running lean, low-risk portfolios to serve the smaller end of the market and brandlords catering to larger occupiers. If this trend continues, consolidation feels inevitable as the market becomes squeezed.
Recent transactions already point in this direction. The Office Group and Fora merger created a larger pan-London platform, while Crosstree Real Estate Partners’ 2025 acquisition of Argyll highlighted investor appetite for premium flex brands with both assets and scale. These moves show how operators are merging or being acquired to strengthen their positions as property owners build their own platforms.
As owners double down on their in-house offers, smaller operators without scale or a clear niche risk being absorbed or exiting the market. Within five years, the sector could be dominated by a small select group of major professional operators, with the rest specialising in areas such as wellness, tech, creative industries or regional markets.
Beyond the inflexion point
For owners, flex /managed is now a core part of asset strategy. It provides income resilience and helps maintain asset value. Even traditional estates such as Grosvenor, Howard de Walden and Portman are developing their own or white label platforms.
For operators, the path forward requires professionalism, operational excellence and clear differentiation in an increasingly owner-driven market. Two routes are emerging: better balanced management agreements that align incentives, or consolidation through M&A to build platforms strong enough to compete with the brandlords while serving the SME segment below 5,000 square feet.
It is perhaps surprising that operators are not looking to compete with owners in this larger market segment, with three notable exceptions. These are BeSpoke, part of BE Offices, Landmark Space in Piccadilly, London and Huckletree, who are offering a managed floor-by-floor product in London’s High Street Kensington.
A market in transition
So are we at saturation? Not yet. What we are seeing is a reshaping of the market. The brandlords will continue to grow as they follow the strong occupier demands. Operators will need to consolidate, compete, specialise or scale up with real professionalism. Owners will undoubtedly become more selective in partnerships, choosing those who can deliver aligned returns and long-term value. As 2026 unfolds, we can expect greater collaboration, more sophisticated operating structures and a clearer division between corporate-grade managed platforms and SME-focused flexible operators.
