Colombia. Flexible spaces (also called Flex Space or Coworking) are a wide range of office solutions operated by third parties tailored to customer needs. These services typically work on membership fees, ranging from shared desks to private offices, including the provision of equipped workspaces, utilities, common area staff, and additional services.
According to recent analysis by JLL Colombia (Jones Lang LaSlle), flexible spaces have been available in Colombia for more than a decade, with Regus as a pioneer and sole player in the local market until 2016, when WeWork initiated an aggressive expansion plan taking advantage of both its brand positioning and a tenant-friendly office market cycle. In 2019, WeWork dominated the market in terms of number of sites, exceeding 92,000 m² of spaces in operation. Since then, the expansion of flexible spaces has been reinforced with the entry of other players into the Colombian market.
In the last two years, the flexible space market has been reconfigured, with the closure of some sites, more aggressive pricing strategies, the exit of Owlo, rising occupancy rates and the introduction of management agreements.
On the other hand, inventory growth has slowed. The share of flexible spaces in the total office inventory stood at 3.3%, still low compared to JLL Research forecasts. Concerns about WeWork's financial sustainability and corporate leadership change halted the local industry leader's expansion plans. In addition, while flexibility is driving demand, the performance of sites outside the Central Business District (CBD) has been weak on account of lower demand than more established locations.
"JLL Research expects the share of flexible spaces in the office market to increase, driven by demand, the increasing availability of furnished offices and a new tenant-friendly market cycle. Conversely, indexing leases to the CPI and companies seeking profitability would limit the scope for more aggressive pricing strategies. In terms of business models, the evolution of interest rates will determine the pace of consolidation of Operating Contracts.", said Rodrigo Torres, research director of JLL Colombia.
How are the rates found?
Over the past two years, average rates have declined as a result of aggressive pricing strategies to increase occupancy. Both Regus and WeWork have reduced their prices. Currently, monthly fees in Bogotá range between COP 500,000 and COP 1,100,000 per user in private spaces depending on the aforementioned characteristics and the occupation of the site.
"HQ reduced the entry price for quality flexible spaces in Bogotá. The company targets a cost-sensitive clientele and leverages owner interest to enter the flexible spaces business in partnership with an experienced global operator. Prices start around 500,000 COP/month/user for private spaces," Torres said.
