Bridging the Gap: How Landlords and Operators Are (or are not) Reshaping the Future of Flexible Workspace
Are management agreements the future, or an impediment to growth?
The Critical Partnership Defining Flex's Next Evolution
Earlier this year, The Global Workspace Association (GWA) brought together experts from WeWork, Industrious, and Brookfield Properties to discuss what many consider the sector's most critical relationship: landlords and operators. This conversation couldn't be more timely as the flexible workspace industry enters what The Instant Group describes as an "era of early maturity.”
Divergent Goals Creating Friction
The panel highlighted how fundamentally different priorities create tension in flex space partnerships:
Landlords prioritize security and stability, valuing long-term leases and consistent rent.
Operators focus on collaborative partnerships that blend hospitality and workspace management to create flexible products.
This misalignment of objectives creates friction that must be resolved for the sector to achieve its next growth phase.
The Evolution Toward Partnership Models
As the flexible workspace market matures, we're witnessing a gradual but significant shift in how these relationships are structured. Traditional lease agreements are giving way to more collaborative models, particularly management agreements, which better balance risk and reward between parties.
Smart Growth Through Management Agreements
For operators in today's market, "the focus ahead isn't explosive growth—it's smart execution," according to The Instant Group's report. With traditional supply growth limited by high interest rates and reduced investment, the most resilient players are adopting lean, asset-light models.
Management agreements represent exactly this kind of smart, strategic growth. Unlike traditional lease models where operators take on significant financial risk, management agreements distribute risk more evenly:
Landlords provide the real estate and capital investment
Operators bring their expertise in hospitality, community building, and workspace operations
Revenue is shared according to predetermined formulas, often with minimum guarantees for landlords
How the World’s Largest Coworking Operator is Growing Smarter Using Asset Light Strategies
IWG, the world’s largest operator of flexible workspace, is leveraging asset-light agreements with landlords to accelerate its growth at an unprecedented rate. In 2023, the company opened 328 new flexible workspace locations and signed a record 867 new agreements, most of which followed its capital-light partnership model. This approach continued to gain momentum in 2024, with IWG opening 624 new locations—including 306 in just the first half of the year—and signing 899 new center deals, again with the vast majority under asset-light arrangements. By partnering with landlords rather than directly leasing the real estate, IWG significantly reduces liabilities on its balance sheet, and reduces operating risk, enabling rapid expansion and allowing the company to meet soaring global demand for flexible workspaces far more quickly than traditional ownership models would allow.
The Management Agreement Advantage
Management agreements offer a structured approach to bridging the landlord-operator divide. Under these arrangements:
Risk sharing: Capital expenditure burden shifts primarily to landlords, while operators focus on what they do best: delivering exceptional workspace experiences
Aligned interests: Both parties benefit directly from the success of the space
Operational flexibility: Operators can adapt offerings to match evolving market demands without renegotiating lease terms
Brand consistency: Premium operators maintain control over the customer experience
Scalability: Operators can grow without massive capital requirements
Looking Ahead: Partnership as the Path Forward
As the flexible workspace industry continues its maturation, the relationship between landlords and operators will increasingly define success in the sector. The Instant Group's report concludes that "as the flex industry course-corrects, the operators who stay nimble, efficient, user-focused, and intentional in their growth will be best positioned to lead the next phase of evolution."
Management agreements represent exactly this kind of intentional growth strategy—allowing for expansion without overextension and creating win-win scenarios where landlords gain expertise and operators gain scale.
For an industry that has weathered significant disruption over the past five years, these evolving partnerships may well be the stabilizing force that ushers in a new era of sustainable growth and innovation.