The regional director for co-working and residential at Yardi, the majority owner of WeWork, has called for the industry to “disintermediate” brokers to improve efficiency and cut costs.
Speaking at the annual Flexible Space Association conference on 13 May, Justin Harley said: “Someone said to me, ‘How come we have to pay these fees and they don’t do a lot?’
“It’s become the Wild West out there and I think the industry has to do something about disintermediating the brokers… that will help everyone. That will help your margins, which helps generate cash, which will help you be more operationally efficient.”
Harley’s comments came after a presentation highlighting findings from the Yardi-sponsored UK Flex Office Market Report 2025 alongside the author of the report Zoe Ellis-Moore, chief executive of flex consultancy Spaces to Places.
The report said the flex sector is reaching the stage of maturity which requires scale and operational efficiencies to make profitability possible.
Harley and Ellis-Moore pointed to research by Deskmag which found that just 46% of flex operators are profitable, while nearly a fifth are not and another 36% just about break even.
Drawing on examples from other operational real estate assets, Harley said: “In the world of student accommodation or hotels… what happens is often a real estate investor will partner with a business for the portfolio.
“In the world of commercial real estate and flex, the partnerships tend to be the building – which doesn’t lend itself very well to full scale.”
Established traditional landlords are creating flex brands, such as Landsec with its flex brand MYO, and becoming ‘brandlords’, which aim to use their existing scale to tap into the growing flex market.
In addition, Harley said increasing operational efficiency is key to ensuring profitability and, to be able to do that, the flex sector would need to generate better data in order communicate the value it can generate for investors.
“I think over the next five years that’s one of the big changes we’ll see,” Harley said: “if you look at student accommodation they have brilliant data. They are super operationally efficient, they’re very slick with how they run their businesses.
“I would urge anyone to look at residential real estate and say, ‘What can I learn from that?’”
He told Estates Gazette that the industry should create a tool similar to Rightmove.
Yardi acquired a majority stake in WeWork last year, after which it acquired Hubble, an online marketplace for co-working and flexible workspace, at the start of this year.
Asked how long it would take an acquisitive company to build a flex market version of Rightmove, he said: “These things always take longer than you think… about 10 years.”
Responding to Harley’s comments, Tom Leahy, co-head of Savills’ flex office agency specialists Workthere, said: “Intermediaries are always part of any market that is fragmented, such as flexible offices. Customers use an intermediary where it adds value to their search, either through an efficient user experience process or through advice that helps them to reach an informed decision. They often have significant market knowledge, and all parties benefit from working together to get the best outcome.
He added: “Intermediaries not only remove the initial burden of cost for speculative marketing from the flex provider, but also allows all providers, regardless of size or advertising budget, to have a market presence. Thus, intermediaries can also help to democratise the choice for the customers by covering the whole market.”
Image © Adrian Pope
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