The Best Office Conversions May Be Hiding In Plain Sight

With office buildings across the U.S. sitting nearly 20% empty and with even more space available for sublease, many buildings must either evolve with the times or risk falling into oblivion. This record vacancy begs the questions, “What will the future of office work look like?” and, “How can office buildings be repositioned to cater to growing tenant demands for flexibility?”

A lot of ink has been spilled about converting obsolete office buildings into new housing stock, a feat that usually requires a perfect window line, narrow floor plates and a forgiving structure — not to mention new zoning, an entirely new capital stack and a special breed of operator, according to Brad Hargreaves' Thesis Driven, a newsletter that analyzes the trends that shape the future of the real estate industry. 

The remaining office assets, however, don’t have to fade into obsolescence or be converted to alternative uses, said Simon Moore, chief operating officer of Serendipity Labs, an international flexible workplace provider.

“To regain their footing, owners need to serve up what today’s tenants want — flexible, highly hosted and inspiring workplace experiences,” he said. “What makes so much office space obsolete is that the long-term lease investing model is breaking as office leases are becoming shorter in term and smaller in size.”  

The problem, Moore said, is that most landlords are focused only on their investors’ demands for long-term leases and aren't equipped to deliver against these expectations. 

The best office conversions are hiding in plain sight: a full or partial flexible office conversion from traditional office leasing. Such conversions offer move-in-ready build-outs in a variety of sizes, collaboration spaces and work lounges all configured and staffed to support requirements that would have ranged up to 20K SF before hybrid work took hold but are now much smaller.

“A flexible office conversion means more than just transitioning away from offering office space on conventional long-term leases using a legacy property management and leasing team,” Moore said. “It can involve repositioning the entire building to offer a fully serviced continuum of workplace solutions that are designed and programmed to match how companies want to consume real estate today.”

High degrees of flexibility, vibrant and welcoming five-star service, and access to a large national network of conveniently located, amenity-rich workplaces are what people are looking for.

Serendipity Labs’ flexible office and coworking conversions allow building owners to win market share from other buildings offering only conventional leases. The company’s offices offer shared tenant lounges, managed and branded prebuilt suites, meeting spaces to support team collaboration and larger move-in-ready spaces — all equipped with the latest technology, on-site staff and abundant amenities. The firm has found that the demand for this offering has risen considerably over the past several months, particularly in suburban markets.

Suburban and exurban areas have continued to flourish across the country, a trend that was in place even before early 2020 due to the reversal of the urbanization of the 2010s that was led by millennials. Among the fastest-growing areas of the nation over the past two years were towns more than 60 miles from a major city center. Over the same period, neighborhoods within 20 miles of a city center experienced a decline in population. 

People are now commuting to city centers less often from their homes in the suburbs or exurbs. Instead, they are opting for a work location that is closer to home to have shorter, less strenuous commutes, giving them more flexibility with their family responsibilities. 

Moore added that the best office conversions, whether in suburban or urban markets, involve transitioning offices' operating and investment models to the tried-and-true hotel industry model, like Serendipity Labs’ workplace model.

Instead of signing a traditional lease as a tenant, Serendipity Labs licenses its proven workplace design, aggregates credit-quality demand through its own central marketing, and delivers day-to-day management services to landlords who want to win more market share for their building and keep existing tenants.   

Serendipity Labs licenses its brand and runs flexible workplace services for entire buildings in Manchester, UK; Rye, New York; Charleston, South Carolina; and the Charlotte, North Carolina, suburb of Lake Norman. It also manages most of a building as a flexible office offering in Westport, Connecticut; Dunwoody, Georgia; and Memphis, Tennessee.  

In Rochester and Buffalo, New York, landlords have incorporated Serendipity Labs into the redevelopment of Nixon-era urban towers that included converting floors from traditional office leasing to residential, retail and flexible coworking, Moore said.

“We are in this period of uncertainty in which companies are trying to rightsize their portfolios, transitioning from bigger office spaces to smaller ones,” he said. “They need to be able to scale up and down as needed or permanently outsource their workplace management requirements, and coworking spaces allow them to do just that.”

Office assets can evolve, and it is clear that they have to, Moore added. That's why making flexible office space a part of the strategy can help buildings win market share and avoid obsolescence.

“It is becoming more obvious that fully or partially converting office space to coworking can ensure that buildings don’t get left behind,” Moore said.

This article was produced in collaboration between Serendipity Labs and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.